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Cell Shock To Be Stopped!

Archived Backgrounder

Cell Shock To Be Stopped!

Ministry of Consumer Services

The Ontario government will introduce strong, consumer-friendly legislation - The Wireless Services Agreements Act, 2012 - which would come into effect six months after it is passed. It removes the confusion and frustration of unclear contracts and surprise add-ons. 

The proposed legislation strengthens the protections available to Ontario consumers when they enter into cell phone and wireless services agreements. It places the onus on wireless services providers to clearly disclose to consumers what they are contracting for and what it will cost. 

Full disclosure of goods and services

More than 70 per cent of Ontarians subscribe to post-paid wireless service agreements. However, many consumers do not understand their agreements and what services result in added costs.

The Wireless Services Agreements Act, 2012 will, if passed, help consumers understand exactly what they are contracting for:

  • Providers will need to clearly explain which services are provided and which would result in added costs, how services can be accessed, and what rates and restrictions apply (for example, if a long-distance plan is within Ontario only).
  • Contracts will need to include the retail value and the actual cost to the consumer of phones provided free or at a discount.
  • Information will be included in the agreement on how cancellation fees are calculated.
  • Companies will have to provide clear information on how roaming costs are calculated and when they will be incurred, and whether a cell phone is locked, for how long, and the cost to unlock it.
Cancel agreements at any time with caps on cancellation fees - or no fee at all

The proposed legislation will 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.

Type of contract

Is cell phone provided free or at a discount?

Cancellation Charge

Month to Month

No cell phone provided

$0 maximum

Cell phone provided free or at a discount

Customer could be required to pay back a proportion of the value of the discounted phone;  e.g., the consumer gets a cell phone valued at $200 for free, for a one-year contract.  If cancelled after six months, the consumer would need to pay $100.

Fixed term

No cell phone provided

10% up to $50 maximum

Cell phone provided free or at a discount

Customer could be required to pay back a proportion of the value of the discounted phone;  e.g., a $500 phone provided at $100 ($400 value), for a one year term, the cancellation cost would be calculated based on the time remaining in the agreement. If cancelled after three months, the consumer would owe $300.


Comprehensive, easy-to-understand agreements

The proposed legislation, if passed, would ensure contracts include clear disclosure of key terms. Companies would also need to deliver an agreement in a form that a consumer can keep, such as an electronic document that can be printed.

If a copy is not provided to a customer 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 customer 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 customer.

Consent

The proposed legislation will require companies to get a customer's express consent if a fixed term contract is to be renewed, extended or amended. This means customers will have to expressly agree to any change to the agreement before it is made. Automatic contract renewal will not be allowed. Consumers will receive updated copies of all amended or renewed agreements.

All-inclusive pricing

Under the proposed legislation, wireless services providers will 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 will see on their bill - the "all-in" cost - will need to be the most prominent price information shown in the ad.

Unacceptable Billing

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 a customer received a loaner phone while their phone was being repaired, the borrowed phone would need to be provided free-of-charge. This will not apply to phones that are not covered by warranty.

Strong, Enforceable Remedies and Consumer-Friendly Protection

The Wireless Services Agreements Act, 2012 will make it an offence for wireless services providers to bill customers for payments a provider is not entitled to under the legislation. Any change to fixed term contracts under the proposed legislation will require the express consent of the customer, making cell shock a thing of the past.

This new law would give any consumer owed a refund under the statute the right to sue the provider to claim three times the amount that the consumer is owed.

Ontario has joined with Québec, Manitoba, Newfoundland and Labrador, and Nova Scotia in taking action towards providing wireless customers strong protections and remedies with regard to any cell phone agreements they sign.

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