McGuinty government strengthens consumer protection

Archived Release

McGuinty government strengthens consumer protection

Ministry of Consumer Services

Sweeping Legislation Creates New Rights For Consumers TORONTO, July 20 - The McGuinty government is introducing the most sweeping and comprehensive changes to Ontario's consumer protection laws in more than 30 years, Government Services Minister Gerry Phillips announced today. "It's a new age for consumers. The new law will restore balance and provide consumers with new rights for the 21st century while creating a more level playing field for businesses, driving consumer confidence and competition," said Phillips. "The old legislation didn't consider the evolution of the Internet and the new ever-changing marketplace. As of July 30, consumers will be granted the same protection for online agreements as all other types of agreements." Negative-option billing, a practice where consumers were charged for goods or services they did not request, will not be allowed under the new law. Misleading estimates for home renovations and moving services will also be against the law, and maximum fines for offending individuals and corporations will double or more. Consumers and businesses will have new rights and responsibilities. The new Consumer Protection Act will significantly improve protection for consumers and strengthen confidence in the marketplace. To help consumers understand their rights, the government has developed a user-friendly website - www.mgs.gov.on.ca - with quick tips and a wealth of useful consumer protection information. When the new act comes into force on July 30, 2005, consumers will have the right to: - Refuse to pay for goods or services that they did not request (negative-option billing) - The same protection when buying or leasing services, as when buying or leasing goods - Receive goods or services within 30 days after they are promised in agreements, or get a refund - Cancel agreements due to unfair business practices within one year - Receive written contracts for goods or services worth more than $50 to be delivered or paid for in the future - Cancel agreements for fitness, dance clubs or most door-to-door sales worth more than $50 within 10 days of signing the agreement - Full disclosure about the cost of long-term leases and interest on purchases in agreements - The same protection for online agreements as all other types of agreements - Final cost estimates of no more than 10 per cent of the original agreed estimate for home renovations or moving services - Cancel timeshare and vacation club agreements, for any reason, within 10 days after receiving a written copy of the agreement. "This legislation is a significant advance in consumer protection," said Joan Huzar, president of the Consumers Council of Canada. "Ontario's new consumer laws are a model for other jurisdictions to follow." "The Retail Council of Canada is pleased to work with the Ministry of Government Services and our members to guide them through this new legislation," said Diane J. Brisebois, president and CEO of the Retail Council of Canada. "The new Consumer Protection Act ensures Ontarians can be confident with the goods and services they receive, and that's good business for everyone." The new Consumer Protection Act also doubles enforcements with maximum fines of $50,000 for individuals and $250,000 for corporations. Imprisonment for individuals will be up to two years less a day. The government is also publishing seven consumer brochures in eight languages: English, French, Italian, Korean, Tamil, Vietnamese, Chinese and Punjabi. The brochures will be available after July 30 at Government Information Centres, MPP offices, public libraries and the ministry's website. For a copy of the new Consumer Protection Act, visit the Ontario government's e-laws website at www.e-laws.gov.on.ca. For more information about consumer protection, visit www.mgs.gov.on.ca. Disponible en français www.mgs.gov.on.ca BACKGROUNDER ------------------------------------------------------------------------- THE NEW CONSUMER PROTECTION ACT Ontario's new Consumer Protection Act (CPA) provides consumers and businesses in Ontario with new rights, responsibilities and remedies for a fair, safe and informed marketplace. Coming into force on July 30, 2005, the new act will make Ontario a world leader in consumer protection. The new Consumer Protection Act was developed in consultation with more than 90 business and consumer groups. The act consolidates six existing consumer protection laws: the Business Practices Act, the Consumer Protection Act, the Consumer Protection Bureau Act, the Loan Brokers Act, the Motor Vehicle Repair Act and the Prepaid Services Act. Ontario's new consumer legislation is based on three guiding principles - fairness for consumers, responsiveness to business and consumers, and flexibility to adapt to future needs. - Fairness for consumers - the law sets out disclosure requirements that ensure both parties have the same understanding of a transaction. For example, a consumer has 10 days in which to cancel a contract and final costs cannot be more than 10 per cent of the original estimate unless approved by the consumer. - Responsive to both business and consumers - the law is practical so that businesses can follow it, consumers can use it and government can enforce it. For example, if a consumer is charged for products or services they did not request (negative-option billing), they can demand a full refund. - Flexibility to adapt to future needs - the law allows the government to respond to marketplace developments as problems emerge. For example, under the legislation consumers cannot be charged advance fees for loan brokers and credit repair. Enforcement and Fines - Stronger enforcement remedies to curb dishonest activity and protect the reputation of Ontario businesses. - Maximum sentence of two years less a day. - Maximum fines will be doubled to $50,000 for individuals and more than doubled to $250,000 for corporations. - The new legislation covers leasing agreements, Internet purchases and agreements that were not covered in the old legislation. TOP 10 2004 CONSUMER COMPLAINTS AND INQUIRIES The ministry's Consumer Services Bureau provides information and advice to consumers and mediates complaints between consumers and businesses. The ministry receives more than 70,000 complaints and inquiries by mail and telephone each year. Here are the top 10 complaints and inquiries received by the ministry in 2004. ------------------------------------------------ Ranking Goods/Services ------------------------------------------------ 1 Collection Agencies ------------------------------------------------ 2 Home Renovations ------------------------------------------------ 3 Motor Vehicle Repairs ------------------------------------------------ 4 Motor Vehicle Purchases (new/used) ------------------------------------------------ 5 Home Furnishings ------------------------------------------------ 6 Personal Items (e.g., clothing, cosmetics, jewellery) ------------------------------------------------ 7 Credit Reporting ------------------------------------------------ 8 Health and Fitness ------------------------------------------------ 9 Timeshare and Vacation Clubs ------------------------------------------------ 10 Cell Phones ------------------------------------------------ Collection Agencies ------------------- The Collection Agencies Act governs collection agencies in Ontario. The ministry is currently consulting on finding additional ways to strengthen prohibited practices for collection agencies. A collection agency must inform the consumer if it plans to take legal action to collect a debt. Collection agencies are not allowed to make harassing phone calls and cannot continue to demand payment from a person who claims not to owe money. Home Renovations ---------------- Existing: Consumers have five days to cancel a contract. New Additional Protections under CPA: Consumers will now have 10 days to cancel a contract. The final costs cannot be more than 10 per cent above the original estimate unless approved by the consumer. Motor Vehicle Repairs --------------------- Existing: If there is a fee associated with providing an estimate, this must be disclosed in advance. Final charges for repair work cannot be more than 10 per cent over the original estimate. New Additional Protections under CPA: Repair shops cannot charge for work without giving the consumer an estimate. The only exception is where an estimate is offered, the consumer declines the estimate and authorizes a maximum amount and the final cost does not exceed that maximum amount. Motor Vehicle Purchases ----------------------- Enhanced consumer protection for purchasing motor vehicles will be covered in the Motor Vehicle Dealers Act, 2002, expected to come into force in 2006. Home Furnishings ---------------- New Additional Protections under CPA: Under the new act, if the promised date of delivery is missed by more than 30 days, consumers can cancel the agreement. Personal Items -------------- Existing: Consumers are protected against unfair practices, such as deceptive promotion and sales pitches. New Additional Protections under CPA: If an unfair practice has occurred, consumers have a year to rescind the agreement. Credit Reporting ---------------- Credit reporting is governed by the Consumer Reporting Act. Existing: It is illegal for a credit repairer to represent that they can cause a material improvement to a consumer's credit file, prior to examining the consumer's report. New Additional Protections under CPA: Consumers will have 10 days up from five days to cancel agreements for credit repair. Health and Fitness ------------------ A personal development services agreement is limited to a one-year term. The business must provide consumers the option to pay monthly installments. New Additional Protections under CPA: A consumer can cancel the agreement for any reason, within 10 days (an increase from the original five days in the old legislation) after receiving a written copy of the agreement on the day all services are available. Timeshare and Vacation Clubs ---------------------------- New Additional Protections under CPA: A consumer can cancel the agreement, for any reason, within 10 days after receiving a written copy of the agreement. If the consumer cancels the agreement, the business must provide a full refund within 15 days. Cell Phones ----------- New Additional Protections under CPA: Contracts must be prominent, clear and comprehensible. Vague language is discouraged in contracts. All required information must be clear, prominent and easy to understand. If there is a dispute over unclear language, the law requires that it be interpreted in favour of the consumer. Payday Lending -------------- New Additional Protections under CPA: The new act establishes clear disclosure requirements for payday lending as part of the rules on credit agreements. The ministry continues to work with the federal government on solutions to the high fees and interest rates charged by payday lenders. The new act requires clear disclosure of costs and has rules around contracts for loans. The ministry is consulting on ways to strengthen disclosure for consumer credit, including payday loans. Complaints and Advice --------------------- Consumers can call the Consumer Services Bureau for advice Monday to Friday from 8:30 a.m. to 5 p.m. at (416) 326-8800 in Toronto or toll free at 1-800-889-9768. The TTY number for people who have hearing or speech difficulties is (416) 325-3408 or 1-800-268-7095. Information and advice about consumer issues are available on the ministry's website at www.mgs.gov.on.ca, where an online complaint form is available and may be submitted electronically. For more information, contact: Ministry of Government Services 250 Yonge St., 32nd Floor Toronto ON M5B 2N5 In Toronto: 416-326-8800 Toll-free: 1-800-889-9768 TTY: 416-325-3408 or 1-800-268-7095 Fax: 416-326-8665 Disponible en français www.mgs.gov.on.caFor further information: Contacts: Matthew Ruttan, Minister's Office, (416) 327-0948; Julie Rosenberg, Ministry of Government Services, (416) 326-8558