On November 8, 2013, the Office de la protection du consommateur
(OPC) released its first consultation document concerning phase
four of its review of the legislation it administers. This fourth
phase is much broader in scope than the third phase, which was
specifically concerned with credit activities, and encompasses
travel agents, collection practices and funeral services, as well
as various amendments to the Consumer Protection Act
In the section of the consultation document that discusses the
proposed amendments to the scope of the CPA, the OPC notes that
many consumers join reward programs, not all of which are free of
charge, that entitle them to obtain certain goods and services. The
contracts for such cards generally stipulate that the more
consumers use them or purchase products at certain specified
locations, the more points or other benefits they earn, which they
can then exchange for goods and services. The OPC remarks that
certain reward card issuers have unilaterally changed the value of
the points earned during the term of the contract and that the
rewards of which consumers were thus deprived were of considerable
value. The OPC concludes by mentioning that a class action has been
instituted against a drugstore on this issue.
The OPC would like reward cards to be included in the definition
of "prepaid cards". This would be a major change, as it
would make reward cards subject to rules set out in the CPA and the
Regulation respecting the application of the Consumer
Protection Act. These rules provide that merchants must inform
an expiry date is prohibited unless the contract provides for
unlimited use of a service; that consumers cannot be charged for
the issue or use of the cards except as provided by regulation; and
that merchants who are party to a contract for the sale of such a
card must refund the card balance on the consumer's request if
it is less than $5.
In light of the OPC's proposal, we believe that businesses
offering loyalty programs should take part in the OPC's
consultation process in order to express their concerns about this
proposed legislative amendment.
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The recent decision of the Ontario Court of Appeal in BMW Financial Services Canada, a Division of BMW Canada Inc. v. McLean provides some useful insight into the relationship between automobile dealers and the financing arms of the manufacturers for whom those dealers are franchisees.
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