Ontario Government Introduces New Consumer Protection Act
On October 23, 2023, the Ontario government introduced Bill 142, the Better for Consumers, Better for Businesses Act, 2023 that will repeal the existing Consumer Protection Act, 2002 (CPA) and enact the Consumer Protection Act, 2023 (New CPA) in its place. The New CPA will retain some aspects of the CPA and will make many other changes and additions to the existing legislation. Among the key changes are the introduction of new rules for many consumer leases (referred to as purchase cost-plus leases), expanded rules around amendment and renewal of consumer contracts, additional consumer rights in relation to remedies and compensation, and expanded compliance and enforcement provisions. The timing for the coming in force of the New CPA is not yet known.
In February 2023, the Ontario government released a consultation paper titled Modernizing Consumer Protection in Ontario - Strengthening the Ontario Consumer Protection Act. This paper forms the basis for the changes now being proposed in the New CPA and provides helpful context.
If enacted, the New CPA will completely replace the CPA. This means that the New CPA is lengthy and detailed. Many of the important details around how the New CPA will operate will be included in one or more new regulations (Regulations) supporting the legislation. The new Regulations have not yet been published.
Highlighted below are eight significant changes included in the New CPA.
- Streamlining of Rules for Consumer Contracts. The CPA includes rules for many types of consumer contracts, including direct agreements, remote agreements, internet agreements and future performance agreements. The New CPA treats all of these as “consumer agreements” and includes expectations that are generally the same for each. Details will be found in the Regulations.
- New Rules for Purchase Cost-Plus Leases. The Ontario government’s consultation paper identified concerns with termination costs and limited disclosure associated with consumer leases for products such as water heaters and furnaces. As proposed in the consultation paper, the New CPA includes rules for purchase cost-plus leases. These are defined as leases where the total amount payable exceeds 90% of the estimated retail value of the leased goods (presumably including installation). These purchase cost-plus leases will include similar prepayment rights to credit agreements, so that a lessee will be able to “buy out” the leased goods at any time for the remaining retail value of the goods. The lessor will be required to provide a buyout schedule. The Regulations will provide clarity about how the calculations will work.
- Expanded Rules for Amendment and Continuation of Consumer Contracts. The New CPA contains stronger rules about the requirements for any continuation (renewal) or amendment of a consumer contract. The details of these requirements will be included in the Regulations. Note, however, that the Ontario government’s announcement of the New CPA indicates that the new legislation will limit when businesses “can make one-sided contract amendments, renewals and extensions without express consumer consent.” The New CPA states that no amendment or continuation of a consumer contract may be made except as provided in the Regulations, and that any amendment or continuation not made in accordance with the Regulations is void.
- New Rules Relating to Assignment of Consumer Contracts. The New CPA includes provisions that expressly make the assignee of a supplier (or lender) responsible to the consumer for all of the obligations of the supplier. For credit agreements, this liability is capped at the amount owing at the time of assignment.
- New Rules Requiring Discharge of Security Registrations. The New CPA requires that a supplier must discharge any related notices of security interests (also known as fixture filings) within 15 days of cancellation or termination of a consumer contract.
- Expanded Rules Relating to Consequences of Non-Disclosure. Like the CPA, the New CPA stipulates that a consumer does not have to pay the cost of borrowing where no disclosure is provided. Added in the New CPA is a provision stating that if certain unenforceable terms are included in a consumer agreement (such as a statement that no class actions are allowed, or that the Sale of Goods Act protections do not apply, or that the supplier can take possession of consumer goods other than those that are the subject of the consumer agreement), then the consumer does not have to pay the cost of borrowing (or the “implicit finance charge” for a consumer lease).
- Expanded Scope of Regulations. Like most legislation, the New CPA includes provisions setting out the areas in which Regulations can be made to support the legislation. In this case, the list of areas is very long and detailed (48 items), signalling that the Regulations under the New CPA may be even more detailed and expansive than the current version.
- Potential Application of New CPA to Existing Consumer Contracts. Regulations under the New CPA may stipulate that provisions of the New CPA and/or supporting Regulations will apply to consumer contracts that were entered into before the New CPA comes into force. This could have the effect of modifying rights and obligations under existing consumer contracts.
The timing for when the New CPA will be in force is not yet known. The legislation is only at the first reading stage, and must pass through the legislature’s standard process before being passed. After that, there will be detailed Regulations to be created and published. Presumably, time will then be required for Ontario businesses to prepare for implementation of updated business practices and documentation to comply with the New CPA. All of this suggests that it will be some time before the New CPA comes into force.
Aird & Berlis will continue to monitor the progress of the New CPA through the legislative process and will report on developments. Please contact the authors if you have questions or require any assistance.