Consumer Protection Act

According to the Chartered Professional Accountants of Canada (CPA Canada) statistics show that 46% of Canadians have been the victim of fraud at some point in their lives. Consumer complaints, beyond fraud, are common in Canada which has led governments at all levels to take steps to proactively protect Canadians. Consumer protection law is governed under provincial and territorial jurisdiction, as well as agencies set-up by government and some non-government organizations. As a result, it can be difficult to understand what obligations a business may have to consumers. Most jurisdictions have similar guidelines which businesses are required to follow in order to ensure they are protecting the rights of consumers and meeting their legal and regulatory obligations.

General Protections

Regardless of the jurisdictions, most legislation covers the core elements of consumer protection. For a business, the following are general guidelines to ensure they meet their obligations under most legislation within Canada:

• Consumers should expect some level of minimum quality for the goods they purchase
• Consumers should not be subjected to abusive or deceptive sales / marketing practices
• Vulnerable consumers should not be subjected to ‘unconscionable’ (unfair, unreasonable, excessive or unjust) sales practices by companies
• Consumers are typically allowed some type of cooling off period where they can return goods or cancel contracts without fear of reprisals
• Consumers should be informed of all terms and conditions of contracts and contracts should be explicit and transparent.
• Any financial terms, especially borrowing costs, need to be clear and in plain language

Businesses which engage in unscrupulous practices or refuse to follow consumer protection guidelines, can be subject to serious fines, injunctions, loss of licences, and related legal consequences. It should be noted that government agencies can use their enforcement powers to aggressively target non-compliant organizations.

Consumer Protection (Federal Government)

Protecting consumers within Canada begins with federal legislation that is developed to promote consumer awareness and consumer protection. There are several Federal agencies and departments which work to protect consumers and are responsible for enforcing legislation related to various issues, including:

Consumer product safety: The Canada Consumer Product Safety Act (CCPSA) regulates the safety of a wide variety of consumer products, except for motor vehicles, food, drugs and animals. The CCPSA is administered by Health Canada.

Packaging, labelling, sale, importation and advertising of prepackaged products: The Consumer Packaging and Labelling Act requires that prepackaged consumer products bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. The Act is administered by the Competition Bureau.

Vehicle safety: The Motor Vehicle Safety Act regulates the manufacture and importation of motor vehicles and motor vehicle equipment to reduce the risk of death, injury and damage to property and the environment. The Act is administered by Transport Canada.

Food, meat and fish inspection, agricultural products, seeds, fertilizers, and animal feed and health: Food Safety and Inspection related Acts are administered by the Canadian Food Inspection Agency.

Safety and nutritional quality of all foods: The Food and Drugs Act establishes standards for the safety and nutritional quality of all foods sold in Canada and is administered by Health Canada.

Federally regulated financial institutions (banks, retail associations and federal trust, loan and insurance companies): Oversight of consumer issues in the federally regulated financial sector are administered by the Financial Consumer Agency of Canada.

Wireless services: The Wireless Code explains your rights and responsibilities as a consumer of wireless services. It establishes standards that all wireless service providers must follow. The Wireless Code applies to all wireless contracts. The Wireless Code was created by the Canadian Radio-television and Telecommunications Commission (CRTC).

Consumer Protection (Ontario Government)

In Ontario, consumer’s rights and businesses obligations are identified within the Consumer Protection Act (https://www.ontario.ca/laws/statute/02c30) which covers the most common consumer transactions. The Consumer Protection Act is a key piece of Ontario’s consumer protection framework that came into in 2002. The fast-paced nature of today’s business environment has led to changes in the way people make purchases, and how businesses work; especially with the rise in e-commerce over the years. As a result, consumer protection laws are constantly being updated to remain modern, fair and give consumers confidence that their rights are protected. Moreover, strong consumer protection laws improve Ontario’s reputation as a place for businesses to grow and invest in. When people trust the businesses, products, and services they spend their money on, the economy flourishes.

Consumer Protection Act (Ontario)

The Ontario Consumer Protection Act applies to all consumer transactions if the consumer is located in Ontario when the transaction takes place.

Disclosure of information

A supplier is required to disclose information that must be clear, comprehensible and prominent.

Ambiguities to benefit consumer

Any ambiguity that allows for more than one reasonable interpretation of a consumer agreement provided by the supplier to the consumer that must be disclosed shall be interpreted to the benefit of the consumer.

No payment for unsolicited goods or services

No supplier shall demand payment or make any representation that suggests that a consumer is required to make payment in respect of any unsolicited goods or services despite their use, receipt, misuse, loss, damage or theft. This means that if someone just sends you something and then demands payment, the consumer does not have to pay.

If a supplier has received a payment in respect of unsolicited goods or services, the consumer who made the payment may demand a refund of the payment in accordance with section 92 within one year after having made the payment.

A supplier who receives a demand for a refund under subsection (6) shall refund the payment within the prescribed period of time.

False, misleading or deceptive representation

It is an unfair practice for a person to make a false, misleading or deceptive representation.

Examples of false, misleading or deceptive representations can include:

• A representation that the goods or services have sponsorship, approval, performance characteristics, accessories, uses, ingredients, benefits or qualities they do not have.
• A representation that the person who is to supply the goods or services has sponsorship, approval, status, affiliation or connection the person does not have.
• A representation that the goods or services are of a particular standard, quality, grade, style or model, if they are not.
• A representation that the goods are new, or unused, if they are not or are reconditioned or reclaimed, but the reasonable use of goods to enable the person to service, prepare, test and deliver the goods does not result in the goods being deemed to be used for the purposes of this paragraph.
• A representation that the goods have been used to an extent that is materially different from the fact.
• A representation that the goods or services are available for a reason that does not exist.
• A representation that the goods or services have been supplied in accordance with a previous representation, if they have not.
• A representation that the goods or services or any part of them are available or can be delivered or performed when the person making the representation knows or ought to know they are not available or cannot be delivered or performed.
• A representation that the goods or services or any part of them will be available or can be delivered or performed by a specified time when the person making the representation knows or ought to know they will not be available or cannot be delivered or performed by the specified time.
• A representation that a service, part, replacement or repair is needed or advisable, if it is not.
• A representation that a specific price advantage exists, if it does not.
• A representation that misrepresents the authority of a salesperson, representative, employee or agent to negotiate the final terms of the agreement.
• A representation that the transaction involves or does not involve rights, remedies or obligations if the representation is false, misleading or deceptive.
• A representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive.
• A representation that misrepresents the purpose or intent of any solicitation of or any communication with a consumer.
• A representation that misrepresents the purpose of any charge or proposed charge.
• A representation that misrepresents or exaggerates the benefits that are likely to flow to a consumer if the consumer helps a person obtain new or potential customers.

Unconscionable representation

It is an unfair practice to make an unconscionable representation. Determining whether a representation is unconscionable, it may be taken into account that the person making the representation or the person’s employer, or principal knows or ought to know:

• that the consumer is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of an agreement or similar factors;
• that the price grossly exceeds the price at which similar goods or services are readily available to like consumers;
• that the consumer is unable to receive a substantial benefit from the subject-matter of the representation;
• that there is no reasonable probability of payment of the obligation in full by the consumer;
• that the consumer transaction is excessively one-sided in favour of someone other than the consumer;
• that the terms of the consumer transaction are so adverse to the consumer as to be inequitable;
• that a statement of opinion is misleading, and the consumer is likely to rely on it to his or her detriment; or
• that the consumer is being subjected to undue pressure to enter into a consumer transaction.

Liability

Each person who engaged in an unfair practice is liable jointly and severally with the person who entered into the agreement with the consumer for any amount to which the consumer is entitled under this section.

Cooling-off period

A consumer may, without any reason, cancel an agreement. Depending on the type of agreement, the cooling off period may differ and a consumer should check immediately to avoid any confusion.

Requirements for consumer agreements

Every consumer agreement for loan brokering, credit repair or for the supply of such other goods or services as may be prescribed shall be in writing, shall be delivered to the consumer and shall be made in accordance with the prescribed requirements.

Advance payments prohibited

Many industries are barred from requiring or accepting any payment or any security for a payment, directly or indirectly, from or on behalf of a consumer. Check to make sure that if the business is asking for a deposit, that they are in fact allowed to do so.

Motor Vehicle Estimates

No repairer shall charge a consumer for any work or repairs unless the repairer first gives the consumer an estimate that meets the prescribed requirements.

Final Thoughts

Consumer protection legislation can be complicated and confusing with overlapping jurisdictions and regulations. However, it is a critical element in the Canadian business landscape as it helps to build trust in consumers. Without trust, businesses will find it difficult to gain new customers. Consumer protection legislation should not be viewed as a burden to businesses, but rather an opportunity to illustrate to customers that they can trust the business or organization they are accessing.