Canada: Consumer Protection Act, 2002 (Ontario) - To Protect Consumers and To Obligate Suppliers

Originally published April 4, 2005 The information contained within this article is only current at the time of writing.

When will the Consumer Protection Act, 2002 (Ontario) ("New Act") come into force?

Commencing on July 30, 2005, the regulations ("New Regulations") to the New Act will come into force. The Ministry of Consumer and Business Services has stated that it expects that the New Act will come into force on July 30, 2005. The Consumer Protection Act (Ontario) ("CPA") is still in force until such time and will have continued application to certain agreements entered into prior to such time.

To Whom does the New Act apply?

If at least one of the parties involved in a consumer transaction is located in Ontario when the transaction occurs, the New Act likely applies. A consumer transaction involves any act of conducting business or other dealings with a consumer. A "consumer" is "an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes".

Why are the New Act and New Regulations of concern?

The New Act and New Regulations have substantially changed the CPA, and include consumer protection measures found in other statutes. The New Act expands on the CPA by providing additional rights and remedies for consumers and imposing further obligations on and increased penalties against suppliers. The New Regulations set out prescribed information that must be disclosed to consumers and elaborate on remedial processes. For example, under the New Act and New Regulations:

  • A supplier cannot prohibit a consumer from starting or being a part of a class action suit.
  • A supplier is deemed to warrant that the services under a consumer agreement are of a reasonably acceptable quality. This is in addition to the deemed warranty in respect of goods.
  • A supplier cannot charge an amount that exceeds the estimate by more than 10%. If a supplier does so, the consumer may require the supplier to provide the goods or services at the estimated price.
  • No supplier can demand payment for unsolicited goods or services. Any material change to goods or services will deem them to be unsolicited from the time of the material change, unless the consumer consented to the change.
  • A specific statement regarding a consumer’s cancellation rights must be added to every time share, personal development service, direct, credit repair, and loan brokering agreement.
  • Before a consumer enters into an internet agreement, the supplier must disclose specific business, product/service and payment information and provide the consumer with an opportunity to accept or decline the agreement and/or correct errors in it. The supplier must deliver a written copy of the agreement to the consumer within a specified time period after the date of the agreement; if the supplier does not do so, the consumer can cancel the agreement within a specified time period after the agreement was entered into. A consumer can also cancel the agreement for a period after receiving a copy of the agreement if the supplier did not comply with the aforementioned disclosure requirements prior to the date the agreement was entered into. Similar requirements and obligations apply to other types of agreements. In general, all disclosure of information must be clear, comprehensive and prominent, and all information must be delivered in a form that can be retained by a consumer.
  • No supplier who "repairs" one’s credit or loan broker can require or accept any payment or any security for a payment, directly or indirectly, from or on behalf of a consumer unless and until the consumer receives the credit or loan of money, or such supplier causes a material improvement to the consumer report, credit information, file, personal information, credit record, credit history, or credit rating of the consumer.
  • Every repairer of a motor vehicle is deemed to warrant all new or reconditioned parts installed, and the labour required to install them, for a minimum of 90 days or 5000 kilometres, whichever comes first.
  • A consumer who has charged to a credit card account all or any part of a payment in respect of a consumer agreement that has been cancelled or that was in contravention of the New Act can request the credit card issuer to cancel or reverse the credit card charge and any associated interest or other charges. Such a request must be made within a specified time period after the end of the period within which the supplier was required to refund the payment. Any credit card issuer who receives a request from a consumer must acknowledge the consumer’s request and, if the request meets the requirements set out in the New Act, must cancel or reverse the credit card charge and any associated interest or other charges, or investigate the request and send a written notice to the consumer explaining why the consumer is not entitled to cancel the consumer agreement and/or demand a refund under the New Act.
  • Every person who is convicted for contravening the New Act or New Regulations is liable to a maximum fine of $50,000 or to imprisonment of a term not more than two years less a day, or to both (under the CPA, the maximum fine is $25,000 and the maximum term of imprisonment is one year).
  • Every corporation that is convicted for contravening the New Act or New Regulations is liable to a maximum fine of $250,000 (under the CPA, the maximum fine is $100,000).

What proactive steps can you take now?

Businesses should determine whether the New Act and New Regulations apply to their particular situation as soon as possible. We recommend that you review your business practices and agreements in light of the New Act and New Regulations, as some of the changes may prove to be a challenge and/or may take some time to implement. We would be happy to discuss your particular situation and the applicability of the New Act and New Regulations. There could be exemptions applicable to you.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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