Simon's Megalomaniacal Legal Resources

Consumer Protection (Ontario) Law - General CPA Law

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Chapter 1 - Overview
(01 July 2013)

1. Overview
   (a) General
   (b) Key Concepts
   (c) Regulatory Techniques Used
   (d) Remedies
   (e) Municipal Jurisdiction Over Consumer Protection
   
2. Statutory and Contractual Interpretation Principles
   (a) Overview
   (b) No Waiver of CPA Rights by Consumer
   (c) Application of the CPA
   (d) Ambiguities in Consumer Agreements and Disclosure Duties
   
3. Identifying Which CPA Rules Apply to Your Situation

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1. Overview

(a) General

The Consumer Protection Act (CPA) is Ontario's legislative attempt to regulate a large range of consumer-focussed economic sectors in order to mitigate abusive business practices.

Aside from recent class action proceedings, this is an area of little sustained advocacy. This is due to the usually small dollar value of most individual transactions - a situation that works to the great advantage of large supplier corporations whose chronic abuses of consumer law often go unchallenged, and even when challenged result only in small losses to them given the lack of effective remedies available under the CPA system.

The CPA regime is complicated to understand and cumbersome to apply. However I hope that this Isthatlegal.ca Consumer Law (Ontario) Legal Guide assists consumers to understand and use the laws that we do have.

(b) Key Concepts

The following are key terms which define the application and operation of the Consumer Protection Act regime [CPA 1]:

• "Consumer"
  
  The term 'consumer' is defined as an "individual acting for personal, family or household purposes and does not include a person who is acting for business purposes" [CPA 1].
  
  
• "Consumer Transactions"
  
  The key term "consumer transactions" is a broad category which includes 'consumer agreements' (ie. contracts, considered immediately below) and which also captures "any act or instance of conducting business or other dealings with a consumer". This larger concept is an attempt to capture all business practices leading up to, during and after the execution of a 'consumer agreement'.
  
  
• Ontario Nexus
  
  The CPA only applies to consumer transactions when they have an Ontario 'nexus' [CPA 2(1)]:

  CPA 2(1)
  Subject to this section, this Act applies in respect of all consumer transactions if the consumer or the person engaging in the transaction with the consumer is located in Ontario when the transaction takes place.

• "Consumer Agreements"
  
  These are contracts for the supply of consumer goods or services between a "supplier" (eg. a retailer) and a consumer (eg. a customer).
  
  
• "Representations"
  
  Representations are 'representations, claims, statements, offers, request or proposals' made for sales or collection purposes. The primary CPA target of representations are advertising representations, though it has neglected potential in application to post-transaction collection practices.
  
  
• Goods
  
  "Goods" means any type of property.
  
  
• Services
  
  "Services" means anything other than goods, including any service, right, entitlement or benefit;
  
  
• Payment
  
  "Payment" means consideration of any kind, including an initiation fee;
  
  
• Supplier
  
  "Supplier" means a person who is in the business of selling, leasing or trading in goods or services or is otherwise in the business of supplying goods or services, and includes an agent of the supplier and a person who holds themself out to be a supplier or an agent of the supplier.

(c) Regulatory Techniques Used

The regulatory techniques used under the CPA regime are several. Some examples are:

• Mandatory Disclosure
  
  This most commonly used CPA tool requires suppliers to, prior or at the time of executing a consumer agreement - and sometimes on an ongoing basis, provide clear, detailed and specific information regarding the terms of the arrangement.
  
  
• Prohibition or Regulation of Certain Practices
  
  The CPA either prohibits or regulates several specific abusive business practices, including:
  
  - false, misleading and deceptive representations ['unfair practices']
  
  - negative-option contract formation [CPA 13], and
  
  - waiver of statutory warranties.
  
  
• Cost Regulation
  
  - making estimates binding (final cost may not exceed 10% of any estimate given) [CPA 10];
  
  - a range of sector-specific cost, fee and charge prohibitions or regulations are scattered throughout sector-specific chapters.

(d) Remedies

The remedies available to consumers to address CPA violations are several, and include:

• Rescission
  
  In perhaps the most potentially potent of all CPA remedies, the CPA grants consumers the right to rescind (cancel), on notice to the supplier, consumer agreements that are non-compliant with its rules [see Ch.7 "General Civil Remedies"].
  
  
• Civil Action
  
  The normal contractual remedial route of the civil courts is made expressly available to enforce CPA entitlements, such as restitution of payments made under rescinded contracts or for illegal fees [Ch.7 "General Civil Remedies"].
  
  
• Direct Action by Non-Payment
  
  There are several instances in relation to sector-specific economic sectors where the CPA removes the supplier's entitlement to payment when they are in violation of CPA duties, particularly with respect to disclosure.
  
  
• Administration Enforcement
  
  Consumers may register complaints with the Ministry of Consumer Services, which may investigate and issue a variety of compliance and similar orders [Ch.8 "Administrative Enforcement"].
  
  
• Prosecution
  
  Regulatory prosecutions are available for a wide range of CPA violations [Ch.9 "Prosecutions"].

(e) Municipal Jurisdiction Over Consumer Protection

It is a little known fact that municipalities have 'consumer protection' jurisdiction in relation to their traditional jurisdiction over licensing businesses [Municipal Act s.10(2)8, 11(2)8; CTA 8(2)8].


2. Statutory and Contractual Interpretation Principles

(a) Overview

Explained here are key principles of statutory and contractual interpretation. The common law often imposes interpretive rules or even 'tendencies' in different areas of law to resolve closely-balanced situations, and these are some expressly imposed by statute that relate to the application of the CPA.

(b) No Waiver of CPA Rights by Consumer

This is probably the most important CPA interpretive principle and it defeats any 'supplier' (ie. retailer) efforts to avoid the CPA regime through the inclusion of written 'waivers' of CPA rights and remedies embedded within consumer agreements. It reads simply [CPA 7(1)]:

CPA 7(1)
The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary.

(c) Application of the CPA

This next provision is called in the legislation an "anti-avoidance" provision. It reads [CPA 3]:

CPA 3
In determining whether this Act applies to an entity or transaction, a court or other tribunal shall consider the real substance of the entity or transaction and in so doing may disregard the outward form.

Essentially this provision authorizes judges or adjudicators to disregard the technical or 'formal' nature of a transaction or a party's business organization and to ask themselves if the situation is 'in essence' a consumer transaction. It is targetted at both situations that are by their nature 'on the line' and at efforts by suppliers to structure their deals to avoid CPA application.

(d) Ambiguities in Consumer Agreements and Disclosure Duties

This next one is a common conflict-resolution interpretative principle that is broadly applied to 'benefits-conferring' legislation (which the CPA is) under the common law. It would almost certainly be inferred by a court or an adjudicator even if it was not expressly set out in the Act [CPA 11]:

CPA 11
Any ambiguity that allows for more than one reasonable interpretation of a consumer agreement provided by the supplier to the consumer or of any information that must be disclosed under this Act shall be interpreted to the benefit of the consumer.

Note however that it is expressly extended to disclosure duties, recognizing and emphasizing the importance of this regulatory technique to the CPA regime as a whole. Most disclosure duties are spelled out in relation to specific 'forms' of consumer agreement [see Ch.3 "Form of Consumer Agreements"] or sector-specific transactions [see the sector-specific chapters].


3. Identifying Which CPA Rules Apply to Your Situation

This is complicated but it is crucial to properly understanding and applying Consumer Protection Act (CPA) law and rules.

First, let's take the concept of an economic 'sector'. This, quite logically, is the main topic by which consumer agreements are categorized under the CPA. Sectors include such economic activities as "motor vehicle repair", "chattel leases", 'loans' etc. I have set these sector-specific sectors in separate chapters in this Guide and this is, unfortunately, the first place most of you will have headed. This is an entirely natural, but also quite wrong way to understand the CPA, because:

Even if you have found a 'sector' chapter that fits with your situation, you cannot assume that all the rules set out in that chapter apply to your situation.

This is because the CPA superimposes a second type of categorization overtop of all sector-specific sectors of consumer agreements, based on the form of the consumer agreement [see Ch.3 'CPA Forms of Consumer Agreement"]. Each 'form' has its own rules - some of which may conflict the economic sector rules.

The different 'forms' turn on the manner in which the consumer agreement was created (ie. as a 'direct agreement', a 'remote agreement' or an 'internet agreement') or by whether it is a 'future performance agreement'. In fact, one single consumer agreement could fall into one economic sector (typically just one), and then into one or more 'forms'. Plainly this can lead to confusion and even conflict in the rules. Because of this the CPA provides for 'Rule Conflict Resolution', which - when conflict arises - determines which rules apply [see Ch.4 'Rule Conflict Resolution']. And, just to top it all off, there are economic sectors which are fully (or partially exempt) from CPA rules as well.

Here are the steps to legally-locating your situation:

Step 1

Review Ch.2 ["Exemptions from Coverage"] to see if you can locate your consumer situation in any of the s.2,3 or 4 exemption types (ie. fully CPA-exempt, partially CPA-exempt or under federal jurisdiction).

• if the sector is fully exempt or under federal jurisdiction, see if you can locate a sector-specific chapter covering it. If you can - use it. If not, it's likely because I haven't written one yet and you are on your own. Sorry.
  
  
• if the sector is not mentioed in Ch.2, proceed to step 2.
  
  
• if the sector is mentioned in Ch.2 but is 'partially exempt', proceed to step 3.

Step 2

If your situation does not fall into an identified consumer sector don't be surprised, lots don't. But if you are sure it is a consumer situation [ie. a goods or services transaction made for "personal, family or household purposes" - not for business purposes: CPA 1] - then it may be covered by the CPA general rules covered in Chapters 5 to 10.

Proceed to Step 4.

Step 3

If the economic sector that covers your situation is 'partially-exempt' from the CPA, read the details of those exceptions in Ch.2, s.3 ["CPA Exemptions from Coverage: Partially CPA-Exempt Categories"]. Subject to those exceptions, your situation may be covered by the CPA general rules covered in Chapters 5 to 10.

Proceed to Step 5.

Step 4

Review Chapter 3 ["Forms of Consumer Agreements"] to determine if your situation falls into any one or more of the four 'form' categories explained there (ie. future performance agreements, direct agreements, internet agreements or remote agreements).

• if it does not fall into any of these four forms, then your situation is probably governed by the general CPA rules covered in Chapters 5 to 10.
  
  
• if it falls into only one of the 'forms', then your situation is probably governed by the rules of that 'form' and the general CPA rules covered in Chapters 5 to 10.
  
  
• if it falls into two or more of the 'forms', then go to Ch.4 ["CPA Rule Conflict Resolution"] and follow the explanation there to determine which of the 'sector' or 'form' rules are paramount, or if they can co-exist together. Your situation is probably governed by those Ch.4-generated rules and the general CPA rules covered in Chapters 5 to 10.

Step 5

Review Chapter 3 ["CPA Forms of Consumer Agreements"] to determine if your situation falls into any one or more of the four 'form' categories explained there (ie. future performance agreements, direct agreements, internet agreements or remote agreements).

• if it does not fall into any of these four forms, then your situation is probably governed by the general CPA rules covered in Chapters 5 to 10, subject to the applicable sector partial exemptions set out in Ch.2, s.3 ["CPA Exemptions from Coverage: Partially CPA-Exempt Sectors"].
  
  
• if it falls into only one of the 'forms', then your situation is probably governed by the rules of that 'form' and the general CPA rules covered in Chapters 5 to 10, subject to the applicable partial exemptions set out in Ch.2 ["Exemptions from Coverage"].
  
  
• if it falls into two or more of the 'forms', then go to Ch.4 ["Rule Conflict Resolution"] and follow the explanation there to determine which if the 'sector' or 'form' rules are paramount, or if they can co-exist together. Your situation is probably governed by those Ch.4-generated rules and the general CPA rules covered in Chapters 5 to 10, subject to the applicable partial exemptions set out in Ch.2 ["CPA Exemptions from Coverage"].

Simple, right? NOT!