Canada: Knocking Gets Knocked: New Restrictions On Door-To-Door Sales In Ontario Coming March 1, 2018

The amendments to the Consumer Protection Act, 2002 and its related regulations, affecting door-to-door sales, will come into effect on March 1, 2018 (collectively, the "New Rules"). If you are a supplier of HVAC equipment and certain other goods and services, or a business who finances such a supplier, you should be aware that the New Rules may have a significant impact on the way you or your clients do business. The New Rules place restrictions on the entering into of direct agreements1 related to those products.

The New Rules are among those enacted by Bill 59, otherwise known as Ontario's Putting Consumer's First Act (Consumer Protection Statute Law Amendment), 2017. As we previously reported, Bill 59 also brought important changes to the Collection and Debt Settlement Services Act and the regulations thereunder, which came into force on January 1, 2018.

To whom do the New Rules apply?

The New Rules will affect a supplier, or a business who finances a supplier, of any of the following goods or services (collectively, the "Products"):

  • Furnaces;
  • Air conditioners;
  • Air cleaners;
  • Air purifiers;
  • Water heaters;
  • Water treatment devices;
  • Water purifiers;
  • Water filters;
  • Water softeners;
  • Duct cleaning services; and
  • Any combination of, or bundles of, the above goods and services

What restrictions do the New Rules create?

Under the New Rules, a supplier can no longer solicit a consumer to enter into a direct agreement for any of the Products through door-to-door sales unless two conditions are met:

  1. A consumer initiates contact with the supplier, and
  2. That consumer specifically requests that the supplier attend his/her home for the purpose of entering into such an agreement.

How can a consumer initiate communications with a supplier?

There are two ways in which a consumer can initiate communications with a supplier:

  1. A consumer can contact a supplier by mail, fax, phone, electronic communication, or, in person (i.e. at the supplier's place of business, a market place, an auction, a trade fair, or an exhibition).
  2. A consumer can respond to communications that a supplier initiated unless the supplier's communications to the consumer were made in person at the consumer's home or during a phone call initiated by the supplier.

Remember, whichever way the consumer chooses to contact the supplier, the consumer must do so for the purpose of entering into a direct agreement.

A consumer will not have initiated contact with a supplier if the supplier has received data-whether indirectly or directly-from measuring or monitoring devices in that consumer's home, unless either that consumer has done one of the above, or the supplier is exempt from the New Rules (see below).

Can a supplier leave marketing materials at a potential consumer's home?

After March 1, 2018, a supplier will still be able to leave marketing materials at potential consumers' homes, so long as the supplier does not also attempt to make contact with those potential consumers to enter into a direct agreement or to otherwise promote the Products (which could potentially cause the supplier to be off-side of the New Rules; see number "2" in "How can a consumer initiate communications with a supplier?" above).

Marketing materials that contain false, misleading, deceptive, or unconscionable representations will automatically contravene the New Rules.

Can a supplier be exempt from the New Rules?

The New Rules will not apply to a supplier in two circumstances:

  1. If the supplier and a customer entered into a direct agreement before March 1, 2018; and
  2. If the following three conditions are satisfied: (a) a written consumer agreement is already in effect; (b) the supplier initiates contact with a consumer for any purpose, and by any means of communication (other than in person, at a consumer's home), and the consumer invites the supplier to attend his/her home; and (c) during that contact, the supplier asks for permission, while at the consumer's home, to solicit the consumer to enter into a direct agreement for the supply of any of the Products, and the consumer agrees.

Does a supplier have any new obligations?

The New Rules create record keeping requirements for a supplier and a new cooling-off period.

Suppliers that enter into consumer-initiated direct agreements for any of the Products must maintain records of each consumer's contact with them for three years from the date of entering into the agreement. Even suppliers that are exempt from the New Rules are subject to these record keeping requirements.

The cooling-off period for all direct agreements is now 10 days. A consumer may, without any reason, cancel a direct agreement at any time from the date of entering into the agreement until 10 days after he/she receives a written copy of the agreement. If a supplier chooses to supply any of the Products during this period, a consumer will not be responsible for any payments to the supplier and can dispose of the Products without any recourse.

Do the special rules for water heaters still apply?

The laws introduced on April 1, 2015 specific to the supply of water heaters will be revoked on March 1, 2018. For now, the New Rules apply to water heaters in the same manner as the other Products.

What happens if a supplier does not comply with the New Rules?

A direct agreement that does not comply with the New Rules will be void. A consumer will not be required to pay for any Products that a supplier chooses to supply under such an agreement and can dispose of the Products without any recourse.

A supplier will also be liable to reimburse a consumer for any related third-party charges that the consumer incurs in relation to a void agreement. If the supplier does not do so, the consumer will be able to recover these charges in court and set off the amount recovered against any other amounts owed to the supplier under any other agreement between them.

Conclusion

The New Rules prohibit a supplier from soliciting a consumer to enter into a direct agreement for any of the Products—unless the consumer has requested the supplier to attend his/her home for this purpose. The risk of non-compliance, for both the supplier and its financier, is that the direct agreement will be unenforceable.

If you are a supplier of these Products, you should review your policies and procedures and update them to comply with the New Rules. You should also create processes to implement and successfully roll-out your updated policies and procedures as of March 1, 2018. If you are a business who finances such a supplier, you should confirm and ensure that your client is compliant.

Caution: There appear to be very few ways under the New Rules for a supplier of Products to legally present themselves in the doorways of consumers who are not already customers of that supplier. 

If you have any questions about the New Rules, or their effect on your business (either as a supplier or a financier), do not hesitate to contact either the authors of this bulletin, or any member of our Financial Institutions & Services Group.2

Footnotes

1 In general terms, direct agreements are consumer agreements for goods and/or services that are entered into in, or at, a consumer's home. They are sometimes referred to as "door-to-door" sales contracts.

2 Note that while this bulletin outlines some of Bill 59's legislative changes, it is not an exhaustive legal analysis. Please refer to the full Act for all of the amendments in context.

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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