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Posted on February 21st 2006 in Legal Articles

The New Consumer Protection Act

The New Consumer Protection Act

Establishing a clear set of marketplace rules with the strength to protect consumers and the flexibility to encourage business growth will help Ontario businesses to flourish.
Jim Watson, Minister of Consumer and Business Services

July 30, 2005 will mark a new era in consumer protection in Ontario. On July 30, 2005 the new Consumer Protection Act, 2002 (CPA) will come into force. This is the first time in almost 30 years that this area of the law has been updated.

The Changes
Two of the biggest changes introduced by the CPA are that the legislation applies to both goods AND services and that it applies to all consumer transactions if either the consumer OR the business is located in Ontario.

The main areas covered by the CPA include:
• Unsolicited goods and services, commonly referred to as negative option marketing;
• Unfair practices such as false, misleading or deceptive representations;
• Future performance agreements;
• Time share agreements;
• Personal development services, such as health clubs, gyms, and modelling agencies;
• Internet agreements;
• Direct agreements;
• Remote agreements, wherein the consumer and supplier are not dealing face to face;
• Repair agreements;
• Credit agreements; and
• Leasing.
Professional services such as those offered by lawyers and accountants are regulated by other legislation and are exempt from the CPA.

Essentially the CPA sets out how various agreements are to be made and handled. While each type of agreement is subject to its own set of rules, they will generally have to meet the following criteria:
• they must be in writing;
• a copy of the agreement must be promptly provided to the consumer;
• failure to comply with the rules will allow the consumer to cancel the contract and have all monies returned; and
• many consumer agreements, including time share and personal service agreements, will include a cooling off period allowing the consumer to cancel the contract during that time with no obligation.

Repair Agreements
With respect to repair agreements for goods such as motor vehicles, the repairer must:
• provide a written estimate to the consumer;
• not charge a fee for an estimate unless the consumer is told in advance that a fee will be charged as well as the amount of the fee;
• not charge a fee for an estimate if the work or repairs in question are authorized and carried out;
• not charge more than 10 percent above the estimate;
• must offer to return to the consumer all parts removed in the course of work or repairs; and
• be deemed to warrant all new or reconditioned parts installed and the labour required to install them for a minimum of 90 days or 5,000 kilometres, whichever comes first.

Violations of the CPA can result in serious sanctions. An individual who is convicted of an offence under the Act is liable to a fine up to $50,000 or to imprisonment for a term up to two years less a day, or both. This is double what the previous legislation set out.

A corporation that is convicted of an offence under this Act is liable to a fine of not more than $250,000. Under the old Act, the maximum fine was $100,000.

The changes to the consumer protection laws of Ontario are quite extensive and will require all suppliers to review how they do business. Service providers, who were not previously covered, will definitely have to look at their policies concerning sales and dealings with consumers. And it will be important that all businesses educate their employees on this new law. To aid in this endeavour the Ministry of Consumer and Business Services has created a webcast highlighting the changes. It is available on the Ministry’s website (www.cbs.gov.on.ca) under the protecting consumers tab.

You can review the Consumer Protection Act 2002 at e-laws.gov.on.ca. And for further information on the new Act, or to discuss whether your company is in compliance with the new legislation, please contact Jane Martin.