No More Cell Shock
Ontario intends to introduce legislation that would strengthen the protections available to Ontario consumers when entering into cell phone and wireless services agreements.
The legislation would, if passed, make it easier for Ontarians to understand the costs and terms of wireless services agreements for cell phones, smart phones and other mobile devices.
Full disclosure of goods and services
More than 80 per cent of wireless service agreements are post-paid, which means people are billed after they sign agreements and use the services. Consumers often experience "cell shock" when they are charged for services they did not agree to or they did not know would result in added costs. An example is when a consumer is charged for paper bills even though their agreement did not include a cost for that service.
The legislation would, if passed, help consumers understand their contracts:
- Providers would need to clearly explain what services are provided, which services would result in added costs, how services can be accessed, rates and restrictions (for example, if a long-distance plan is within Ontario only).
- If a phone is provided free or at a discount, the contract would need to include its retail value and the actual cost to the consumer.
- Information on how cancellation fees are calculated would need to be included in the agreement.
- The legislation would also require companies to provide information on roaming charges and whether a cell phone is locked, for how long and the cost to unlock it.
Cancel agreements at any time with limits on cancellation costs
The proposed legislation would give consumers the right to cancel a wireless services agreement at any time by giving notice to their wireless services provider. The cost to cancel would depend on the type of agreement. Cancellation costs would be capped.
There would be no cost to cancel no-fixed term agreements where no phone was provided. If a phone was provided free or at a discount price, the maximum cancellation fee would be a pro-rated amount of the cost of the phone. For example, if a $500 phone was provided at $100, the cost to cancel would be calculated as if the agreement was for four years. In that case, if a customer cancelled after two years, the customer would owe $200.
For fixed-term agreements where a phone was not provided, the maximum cost to the customer would be either $50 or 10 per cent of the remaining payments under the contract (whichever is less). If a free or discounted phone was part of the agreement, the cancellation fee would be a pro-rated amount of the value of the phone calculated over how much time has expired. For example, if a $500 phone was provided at $100 for a one-year agreement, the cost to cancel would depend on the time left in the agreement. If a customer cancels after three months, the customer would owe $300.
Comprehensive, easy-to-understand agreements
The proposed legislation, if passed, would ensure contracts include clear disclosure of key terms, making them more understandable to consumers. Companies would also need to deliver an agreement in a form that a consumer can keep, such as electronic documents or printed copies.
If a copy is not provided to the consumer at the time the agreement is made or the company does not make all the disclosures that the law requires including all the key terms of the contract, a consumer would have the right to cancel the agreement within one year of signing and the company would need to refund all payments made under the contract to the consumer.
If passed, the proposed legislation would require companies to get a customer's express consent if a fixed term contract is to be renewed, extended or amended. This means customers must expressly agree to any change to the agreement before it is made. Automatic contract renewal would not be allowed. Consumers must receive updated copies of all amended or renewed agreements.
Under the proposed legislation, wireless services providers would have to include the total cost of an agreement in any price advertising, making prices more transparent. This means that all charges that a customer would see on their bill - the "all-in" cost - would need to be the most prominent price information shown in the ad.
Under the proposed legislation, consumers could not be charged for services they could not access because their hardware was being repaired while under warranty. If the customer received a loaner phone while their phone was being repaired, the borrowed phone would need to be provided free of charge. This would not apply to phones that are damaged by the consumers or not covered by warranty.
Strong, Enforceable Remedies and Protections
The proposed legislation, if passed, would make it an offence for wireless services providers to bill customers for payments a provider is not entitled to under the legislation. The legislation would give consumers who are owed a refund the right to sue the provider and claim three times the amount that is owed them.
Ontario is joining with Québec, Manitoba, and Newfoundland and Labrador in proposing legislation that would offer Ontario consumers strong protections and remedies when it comes to the cell phone agreements.