Ontario government proposes new, modernized consumer protection legislation

In Ontario, most consumer transactions are governed by the Consumer Protection Act, 2002 and its regulations (CPA). The CPA has been in effect for decades and affects the daily lives of all Ontario consumers. Recently, the Ontario Ministry of Public and Business Service Delivery (Ministry) proposed a new, modernized CPA in its consultation paper Modernizing Consumer Protection in Ontario: Strengthening the Consumer Protection Act, which is now open for public comment until March 17, 2023.

The consultation paper is part of the Ontario government’s comprehensive review of the CPA, which it commenced in 2020. If implemented, the proposed amendments will impose sweeping changes to the consumer protection regime and will likely impact any business dealing with consumers in Ontario. We summarize the key amendments below.

General amendments

Consolidating Contract Disclosure Rules

The CPA currently requires businesses to disclose certain information before and after entering into certain consumer agreements, which varies depending on the type of agreement or the circumstances in which it was entered into (e.g., agreements entered into during door-to-door sales, agreements entered into from a distance, internet agreements, and agreements that require performance or payment in the future). 

These distinct sets of disclosure requirements contain significant overlap. To reduce confusion and modernize the required disclosures, the Ministry is proposing to consolidate them into a single set of rules that would apply generally to most consumer contracts. If needed, additional disclosures or requirements may be imposed for certain types of contracts.

Unilateral Contractual Amendment

Ontario is one of a few Canadian provinces that regulate the unilateral amendment or continuation (i.e., renewal or extension) of consumer contracts by a business. The CPA currently imposes certain conditions for a purported amendment or continuation to be effective, which vary depending on whether the agreement expressly provides for such amendment or continuation.

The Ministry proposes to replace these rules with simpler and clearer rules. For most contracts, explicit consent of the consumer will be required to amend or continue the contract. There will be certain exceptions – for example, the following types of amendments can be made only by giving advance notice:

• Minor amendments (e.g., changes to the address of the business)
• Amendments required to comply with a new law
• Amendments to an indefinite term contract, provided that the consumer can cancel at no cost (other than certain permitted charges) and 30 to 90 days’ notice is provided

Unfair Practices

The CPA currently prohibits unfair practices such as making a false, misleading or deceptive representation, or an unconscionable representation. If there has been an unfair practice, the consumer has a right to rescind the contract within one year of entering into the contract.

The Ministry proposes to amend the current list of examples of unfair practices under the CPA to provide for greater clarity and to address emerging practices. In addition, the proposal provides for a longer-term remedy: consumers will be given the right to rescind a contract for one year after entering the contract or one year after an unfair practice takes place, whichever is later. 

Prohibited Contractual Terms

Under the current CPA, certain contractual terms such as mandatory arbitration and waivers of statutory warranties or class action lawsuits are invalid in consumer contracts. However, there is no express prohibition of such terms, and, in our experience, businesses sometimes include them in consumer contracts even though they are not legally enforceable.

The Ministry proposes to expressly prohibit such terms. If prohibited terms are included in a consumer contract, the consumer will have a right to cancel the contract within one year. The Ministry also proposes to prohibit other terms not currently addressed under the CPA, including clauses that prevent consumers from posting negative reviews or comments and clauses that purport to limit the business’ liability for breach of implied warranties and conditions.

Refusing to Pay Statutory Refunds

To deter businesses from refusing to provide statutory refunds to consumers, the Ministry is proposing to provide that consumers who are successful in a legal action for a statutory refund are entitled to recover three times the refund amount that the business failed to provide.

Businesses Facilitating Contraventions of the CPA

The CPA currently does not address the possibility that businesses may contravene the CPA with the assistance of an intermediary company. To address this modern reality, the Ministry proposes to allow the director to issue compliance orders over any business that facilitates another business’ contravention of the CPA. This could extend the risk of enforcement to, for example, online platforms and billing services who work with consumer-facing businesses.

Sector-specific amendments

The Ministry is also proposing certain sector-specific consumer protection measures. These include:

• Services that promise to help consumers break or exit contracts. The Ministry is proposing to prohibit advance payments for such services and to provide for a 10-day cooling-off period.
• Timeshares. The Ministry is proposing to provide new and existing owners of timeshares, who have held their interest for at least 10 years, the right to give notice to exit their timeshares. The maximum cost to exit will be capped at 1.5 times the annual fees. 
• Leases where total payments exceed 90% of the leased good’s retail value. The Ministry is proposing to establish a 10-day cooling-off period for such leases, strengthen disclosure requirements, and set limits on termination costs.

Notices of security interests (NOSI) in home fixtures financing sector. Currently, if a business fails to discharge a NOSI after a lease contract ends, the NOSI may only be discharged through a court order, which can be onerous to the consumer. The Ministry is proposing to clearly require businesses to discharge the NOSI after the contract ends, and to implement an alternative method for consumers to discharge the NOSI in cases of noncompliance.