Public Consultation Leads to Revised Draft Regulation Under Ontario's Consumer Protection Legislation

© 2004, Deeth Williams Wall LLP. All Rights Reserved. By: Rosa Kim (October 13, 2004)

The Ontario Ministry of Consumer and Business Services recently released a revised version of its draft Regulation under the Consumer Protection Act, 2002 (Act)¹ following an official public consultation process². The newly revised draft Regulation incorporates a number of substantive changes as a result of the consultation input, but for the most part, makes technical adjustments to provide greater clarity. While the Act has yet to be proclaimed into force, its full implementation in Ontario appears to be imminent as the Regulation gradually comes into final form.

The Act consolidates six core consumer protection statutes and significantly expands consumer rights and entitlements. With limited exceptions, the Act applies to all consumer transactions covering goods or services where the consumer or business (supplier) is located in Ontario. The Regulation makes the Act operational and deals with a wide range of consumer protection issues, such as information disclosures and consumer remedies.

Part IV of the Act contains provisions specifically directed to Internet agreements, which are defined as &quotconsumer agreements formed by text-based Internet communications"³. The following is a summary of the revised draft Regulation as it applies to Internet agreements⁴.

Application

Appearing as it did in the original proposals, the revised draft Regulation provides that the Act will apply to Internet agreements where the consumer's total potential payment obligation exceeds $50⁵.

Exemption

The revised draft Regulation proposes that agreements for the supply of goods and services regulated under the Motor Vehicle Dealers Act, 2002, the Real Estate and Business Brokers Act, 2002, the Travel Industry Act, 2002 and the Funeral, Burial and Cremation Service Act, 2002, will be exempt from the provisions of the Act dealing with Internet agreements⁶. Agreements subject to these Acts, therefore, are not subject to the information disclosure requirements, content and delivery obligations or cancellation rights that apply to Internet agreements.

As previously proposed, the revised draft Regulation also provides exemption for professional services regulated under various laws from application of the entire Act⁷.

Overlap

The Internet agreement provisions set out in Part IV of the Act do not apply to the following consumer transactions that are also Internet agreements: credit agreement, lease, agreement for work on or repairs to vehicle, agreement for loan brokering or credit repair, time share agreement, personal development services agreement, and direct agreement⁸.

An Internet agreement that is also a future performance agreement or a remote agreement (but not a time share agreement, a personal services agreement or direct agreement) does not have to satisfy requirements relating to future performance agreements or remote agreements⁹.

Suppliers should sort through the overlap rules and the definitions of the various types of agreements to confirm which provisions of the Act will and will not apply to their online consumer transactions.

Information Disclosure

Of particular interest from an e-commerce perspective are the information disclosure requirements with respect to Internet agreements. The disclosure requirements appearing in the revised draft Regulation remain largely the same as those that were originally proposed, with three specific refinements highlighted below. Before entering into an Internet agreement with a consumer, suppliers must disclose:¹⁰

• the supplier's name, telephone, address and other contact information such as fax number or email address;
• a fair and accurate description of the goods and services, including technical requirements related to the use of the goods or services;

  The original draft Regulation required that a supplier disclose to the consumer a fair and accurate description of "any relevant technical specifications." The revised draft Regulation makes it clear that technical requirements need only be disclosed if they are related to the use of the goods and services being supplied.

• an itemized list of the prices of goods and services to be supplied, including tax and shipping charges;
• a description of any additional charges such as customs duties or brokerage fees;
• the total amount payable or periodic payments owing;
• delivery or commencement dates;
• the place to which goods are delivered or where services are provided;
• the means of delivery of the goods and the identity of the person to perform the services if they are terms of the agreement;

  The original draft Regulation required disclosure of the specific means of delivery of goods and the identity of the person providing services on the supplier's behalf. These disclosures are now only required if they are specified as terms of the agreement (for example, if a supplier holds out a specific manner of delivery).

• cancellation, return, exchange and refund policies;
• if credit is to be extended, disclosures required under the credit section of the Act and Regulation;
• a description of a trade-in arrangement if any;
• currency if not Canadian currency; and
• any other restrictions, limitations and conditions of purchase that apply

  A supplier need only disclose those restrictions, limitations and conditions if they are "of purchase," consistent with the Internet Sales Contract Harmonization Template. The original draft did not provide for this proviso. Consequently, a supplier is not obliged to disclose those limitations that arise outside their contract with the consumer (such as limits on manufacturers' warranties and intellectual property limits).

Under the Act, non-disclosure of any of the above required information entitles the consumer to cancel the agreement within a specified period of time.¹¹

Content of Agreement and Delivery Obligation

The original draft Regulation obligated suppliers to deliver a copy of the Internet agreement in writing to the consumer. No changes were made on this point in the revised version. The copy must be delivered within 15 days of the consumer entering into the agreement and must include the disclosure information listed above, the consumer's name and the date of the agreement.

The agreement may be delivered: (i) in any manner that ensures the consumer is able to retain, print and access it for future reference, such as sending it by email; (ii) by fax or mail; or (iii) in any other manner that allows the supplier to prove that the consumer has received it¹².

Agreement Amendments, Renewals and Extensions

Very minor drafting changes were made to the amendment, renewal and extension provisions of the draft Regulation. In short, the revised draft Regulation provides for amendment, renewal or extension of an Internet agreement: (i) by express agreement whether or not the consumer agreement provides for it; or (ii) in accordance with a provision of the agreement¹³.

In the latter case, the Regulation effectively allows the supplier to amend, renew and extend the agreement unilaterally provided that: (i) the agreement authorizes the supplier to do so; (ii) the agreement gives the consumer an option of terminating the agreement or retaining the existing agreement; and (iii) adequate prior notice is given to the consumer¹⁴.

The Future of Consumer Protection Online

The Act and Regulation provide for a comprehensive approach to consumer protection. It will be prudent for suppliers conducting online transactions to become familiar with not only the provisions directed to Internet agreements, but the terms of general application that will soon establish the statutory floor for consumer protection in Ontario.

A final Regulation will be prepared and submitted for governmental review. Until the Act is proclaimed and the final Regulation approved, the current consumer legislation and Regulations will continue to apply to online transactions. It is expected that the Act and Regulation will come into force five months after the day upon which the Regulation is filed with the Registrar of Regulations.

In anticipation, suppliers should be mindful of the expected changes and adapt their online practices accordingly.

Endnotes

Contact James Kosa or any other members of our Information Technology Group for more information on Consumer Protection Legislation.