Canada: Past Due: Collection Laws Get An Update

On January 1, 2018 portions of Ontario's Putting Consumers First Act (Consumer Protection Statute Law Amendment), 20171, also known as Bill 59, will come into force, bringing important changes to the Collection and Debt Settlement Services Act2 (the "CDSSA") and the regulations3 thereunder (the "Regulations").

Who does the legislation apply to?

The definition of "collection agency" will be expanded. A collection agency will now include a person who purchases debts that are in arrears (past due) and collects them.4 Whereas before, a purchaser of a debt was essentially placed in the shoes of the original creditor, the new definition will require a person who purchases debts that are in arrears and wants to collect them to either become or to use a registered collection agency to do so.

Despite the enhanced definition of a collection agency, Bill 59 provides many exemptions describing circumstances where a purchased debt would not be subject to the CDSSA, including:5

  • where a debt was purchased by virtue of acquiring/merging with a business that owned the debt;
  • where a debt was acquired through seizure of accounts receivable under a security agreement;
  • where, for the purposes of a financing transaction, the debt was acquired by taking an assignment of the contract that gave rise to the debt;
  • where a person has purchased a financing agreement or payments due thereunder;
  • where the debt's terms allow for it to be collected under the name of the original creditor; and
  • where the debt created under an agreement to finance the purchase of goods/services and the creditor assigns the rights to payments to a third party, even if the original creditor continues to collect on behalf of the third party.

Similarly, the amended Regulations will also provide new exemptions, setting out further situations where the CDSSA will not apply to what would otherwise be considered collections activities, including:6

  • where the collector is a property manager collecting rent owed by tenants;
  • corporations collecting debts of affiliate corporations (however, if the corporation that owns the debt to be collected purchased the debt in arrears, then the CDSSA continues to apply);
  • where the collector is the original creditor;
  • where the debtor is not an individual, the owner of a sole proprietorship, a member of a partnership or someone who provided a personal guarantee;
  • where the collector is a person/entity registered under the Securities Act or Commodity Futures Act, and their employees, to the extent of the business authorized by that registration; and
  • where the collector is licensed under the Mortgage Brokerages, Lenders and Administrators Act, 2006 with respect to the activities authorized by the license.

Disclosure

Another change is that at the request of a debtor, a collection agency must now provide the debtor with a breakdown of the current amount owing under the debt.7 While the legislation does not describe the particulars that must be provided in a "breakdown", it is fair to assume that the collection agency must be prepared to outline the following information:

  • balance when first due;
  • interest accrued since due date;
  • interest rate; and
  • any fees/penalties

Prohibited Practices

Whereas before a collector could not communicate with a debtor by means that enable the costs of the communication to be payable by the debtor, under the amended Regulations there is no such prohibition. However, note that this is provided that the collection agency or collector reimburses the debtor for any charges within 15 days, should the debtor request reimbursement and provide the prescribed evidence proving the charges incurred.8

Administration of Collection Practices

Bill 59 has the function of removing some of the red tape that collection agencies face in Ontario. Starting in the new year, collectors will no longer need to be individually registered/licensed to engage in collection activities, as long as they are employed by a registered collection agency.9 Collection agencies retain their obligation to notify the Registrar of the commencement or termination of employment of a collector.

Moreover, the amendments to the CDSSA will allow the Registrar to establish written policies regarding the ways in which to interpret, administer, and enforce the CDSSA—which will be publicly available.10 These policies will likely create additional compliance requirements. Considering the lack of case law in this area, hopefully the written policies will prove to be a valuable resource for the public by providing clarification and guidance on prohibited collection practices.

In addition to any pre-existing penalties under the CDSSA, Bill 59 introduces the use of prescribed administrative monetary penalties to promote compliance with the CDSSA.11 There will be absolute liability for these penalties and they may be imposed without a hearing. Though Bill 59 does provide for a right to appeal, it is unclear if this process will be an independent one. As a result, there may be a lack of due process surrounding how these penalties will be assessed.

Conclusion

Bill 59's amendments to the CDSSA will be important for debt collectors, consumers, and businesses in the leasing and lending industry to take into account. Among other changes, the amendments have the effect of both increasing the scope of the CDSSA's application and carving out many exemptions. While there appears to be a move towards more stringent enforcement of the CDSSA, the introduction of public policies regarding interpretation, administration and enforcement will hopefully clarify the legislation as we move forward.   

If you have any questions about these amendments, do not hesitate to contact either the authors of this bulletin, or any member of our Financial Institutions & Services Group.12

Footnotes

1 SO 2017, c. 5 – Bill 59.

2 RSO 1990, c. C. 14.

3 RRO 1990, Reg. 74.

4 Bill 59, Schedule 2, s. 1(1) and (2).

5 Bill 59, Schedule 2, s. 2(3).

6 The Regulations (as will be amended), ss. 19.3 to 19.9.

7 The Regulations (as will be amended), s. 13(10.2). Note that as of July 1, 2018 enhanced disclosure requirements in mandatory initial written notices from collection agencies will take effect. Please contact the authors or Gowling WLG (Canada) LLP if you would like more information.

8 The Regulations (as will be amended), s. 19.10.

9 Bill 59, Schedule 2, s. 4.

10 Bill 59, Schedule 2, s. 3.

11 Bill 59, Schedule 2, s. 9.

12 Note that while this bulletin outlines some of Bill 59's legislative changes, please refer to the full Act should you wish to review all of the amendments.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Jan 2018, Seminar, London, UK

Join Gowling WLG's pensions team as they explain some of the biggest challenges facing trustees and employers in the coming year and provide practical ways of dealing with them.

25 Jan 2018, Seminar, Birmingham, UK

2018 is set to be another big year in employment, with employers set to face new challenges and responsibilities. At our event, looking ahead to next year, we will be discussing four key issues you might face in 2018, providing useful tips and answering your questions.

2 Feb 2018, Seminar, London, UK

2018 is set to be another big year in employment, with employers set to face new challenges and responsibilities. At our event, looking ahead to next year, we will be discussing four key issues you might face in 2018, providing useful tips and answering your questions.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions