Consumer Protection

By Alan Gahtan - Oct 28, 2002

On September 26, 2002 , Tim Hudak, Minister of Consumer and Business Services introduced Bill 180, the proposed Consumer Protection Statute Law Amendment Act, 2002.

The impetus for this proposed legislation stems from Ontario ’s desire to keep up with changing times. In today’s marketplace, businesses and individuals depend upon cell phones, fax machines, voice mail, e-mail and more importantly, the Internet. With the emergence of the Internet, comes a variety of scams such as personal loans being offered that never reach the borrower, worthless and unnecessary credit card insurance being promoted, and get-rich-schemes that tend only to enrich those involved in the scam to the detriment of the Internet consumer.

Under the proposed legislation, prior to a consumer entering into an Internet agreement, the supplier would be required to disclose certain prescribed information to the consumer, provide the consumer with an express opportunity to accept or decline the agreement and to correct errors. Information required to be disclosed by a supplier under the proposed legislation would have to be “clear, comprehensible and prominent”. A consumer would have the right to cancel a contract, including one agreed to through use of the Internet, if goods were not delivered or services had not begun within 30 days of the date specified in the contract, unless the consumer had granted written permission for delayed delivery.

In addition to the proliferation of technology, the Ontario government recognizes the rapid growth of the service economy and an increase in consumer leasing. As a result, the proposed legislation would extend protections to services and would cover sales, leases as well as other kinds of transactions. Negative-option billing, the practice of billing for goods or services without the consent of the consumer, would be prohibited. Consumers would not be held accountable for goods or services that they did not request and did not agree to pay for. For instance, protection would be provided to consumers where Internet service providers continued to withdraw monthly payments from bank accounts once their service contract expired. Furthermore, cable television companies would be prohibited from automatically billing consumers for additional channels upon the completion of a trial period.

High-pressure sales tactics are another target of this proposed legislation. The 10-day cooling-off period that presently exists for door-to-door sales would be extended to fitness and health clubs, modeling and talent agencies and other personal development services as well as time shares. Consumers making deals using the Internet would have a 7-day cooling off period after receiving a copy of the agreement, provided that the supplier: (i) did not disclose certain prescribed information to the consumer or (ii) did not provide the consumer with an express opportunity to accept or decline the agreement or to correct errors immediately before entering into it. In addition, consumers would be able to cancel an Internet agreement within 30 days after the date the agreement was entered into, if the supplier did not provide the consumer with a copy of the agreement in writing.

Protections would be provided against the practice of “low balling”, whereby a consumer receives an unrealistically low quote in an attempt to receive the consumer’s business. A proposed 10% estimate rule would provide that the consumer should not be charged more than 10% for any goods and services above the estimated amount in the consumer agreement.

In his introduction of Bill 180, Hudak noted that all of the requirements “require teeth to make them effective”. For that reason, enforcement powers under the proposed legislation would be strengthened and made consistent across the board. The maximum fines for contravening a consumer law would be doubled to $50,000 for individuals and more than doubled to $250,000 for businesses. Maximum sentencing for individuals currently varies, however, under the proposed legislation, maximum sentencing would be two years less a day.

The proposed act would provide the Ontario government with tools to address scams in our borderless society by enabling the minister to enter into formal agreements with enforcement agencies in other jurisdictions and exchange information with them, noted Hudak. “Our work with partners has been very successful in the past. Our strategic partnership against cross-border scams and fraud, for example, has shut down more than 40 telemarketing boiler room operations since it was initiated three years ago.”

Further information regarding Bill 180 can be obtained at http://www.ontla.on.ca/library/bills/180373.htm.

© 2005 Alan M. Gahtan. All Rights Reserved | Use is subject to these Legal Terms
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