Ontario Law Commission Calls For Stronger Online Consumer Protection

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On May 13, 2024, the Law Commission of Ontario (LCO) released its "Improving Consumer Protection in the Digital Marketplace" report...
Canada Consumer Protection
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On May 13, 2024, the Law Commission of Ontario (LCO) released its "Improving Consumer Protection in the Digital Marketplace" report, calling for significant additional reforms to Ontario's recently adopted Consumer Protection Act, 2023 (CPA 2023). The proposed reforms are aimed at the digital marketplace — specifically, terms of service contracts for online transactions.

Set to replace the Consumer Protection Act, 2002, new consumer protection legislation received Royal Assent in December 2023. As of the time of writing, however, no date has been set for its coming into force. Blakes has reported on the new CPA 2023 in a previous bulletin (read here).

The authors of the LCO Report believe that CPA 2023 does not provide sufficient protection for online consumers. They note that online transactions have increased exponentially since Ontario's Consumer Protection Act was last substantially amended over 20 years ago, yet the new CPA 2023 does not include a dedicated framework to govern terms of service contracts for online transactions.

The LCO Report urges the adoption of a dedicated legal framework to govern terms of service contracts for online transactions. The Report recommends significant additional amendments either to CPA 2023 itself, or to regulations to be adopted under it, including:

  • Prescribing the disclosure of information for online contracts
  • Prescribing the form and content of online contracts
  • Prescribing the making, amending or continuation of online contracts
  • Improving notice and disclosure with up-front "key information" that is explicit about consumers' risks, consequences and choices
  • Establishing a plain language requirement and standard for online contracts
  • Establishing a good faith duty for unilateral contract amendment in routine circumstances

The LCO Report further recommends amendments to address potentially deceptive, unfair or unconscionable practices in online transactions, including:

  • Prohibiting specific online practices that deceive, coerce or nudge consumers into unwanted choices (i.e. addressing so-called "dark patterns")
  • Defining the failure to accommodate as an unconscionable contracting practice
  • Protecting youth online by adopting an age-appropriate design code
  • Making it an unconscionable act to take advantage of a consumer because of their age

The LCO Report also includes specific recommendations to increase enforcement measures, including:

  • Increasing the use of investigations, systemic investigations, consent agreements (including fines), and interpretive guidance
  • Establishing minimum standards for investigations of consumer complaints
  • Establishing adaptable sliding-scale fines and penalties commensurate with the size of the business and increasing maximum fines and penalties
  • Establishing damages for disgorgement and specifying statutory damages
  • Considering the establishment of an Ontario consumer assistance organization

Finally, the LCO Report recommends eliminating the minimum monetary threshold to trigger consumer protections, such that free and low-cost online platforms would also be subject to CPA 2023.

A full list of recommendations can be found in the Report, which is available at www.lco-cdo.org. The LCO has invited submissions or comments on its Report, which can be submitted on its webpage.

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