26 Oct Ontario Proposes New Consumer Protection Law
Kelly Harris and Jane Huang
Ontario has announced new legislation that would replace the existing consumer protection laws, with amendments focusing on prohibiting dark patterns such as subscription traps, auto-renewals and unenforceable contract terms like arbitration clauses and class action waivers. It also proposes doubling penalties, which would be increased to $500,000 CAD for corporations.
If implemented, the Better for Consumers, Better for Businesses Act, 2023 would bring about the following key changes for consumers and businesses in Ontario:
- Prohibiting unfair business practices: Unfair business practices like price gouging, deceptive representations, and false claims will be specifically prohibited, non-compliance with which would give consumers the right to cancel their contract.
- Prohibiting class action waivers, arbitration clauses and governing law provisions: It would be prohibited to include a term in a contract that implies consumers must submit to arbitration, waive their class action rights, or resolve disputes under a foreign law or in a court outside of Ontario. While these clauses are already unlikely to be enforceable, the new law addresses concern that including them in consumer contracts could mislead consumers about their rights.
- Updating rules for gift cards: Bill 142 doesn’t have a lot of detail, as much is left to (forthcoming) regulations. However, it hints that new disclosures may be required when selling gift cards, and that current expiry loopholes may be closed. It also hints that there may be new flexibility for charging fees on gift cards, which currently are only allowed in limited circumstances, like mall gift cards.
- Deterring businesses from refusing to provide statutory refunds: If a business refuses to pay a statutorily-mandated refund, consumers would have the right to sue for three times the original refund amount, including on a class basis.
- Addressing automatic renewal contracts: Additional rules in (forthcoming) regulations will tighten up permissible contract renewals and extension of fixed-term contracts, and how to make unilateral changes to ongoing contract terms.
- New consumer rights to provide reviews: Bill 142 also introduces new protections allowing consumers to write reviews. Business will be prohibited from including terms in consumer contracts that prevent consumers from publishing a review about the business or its products/services, for example attempting to levy fees on consumers for leaving a bad review.
- Making it easier to cancel subscriptions and membership agreements: The government has previewed that the forthcoming regulations will prohibit businesses from creating unnecessary barriers that make it difficult for consumers to cancel contracts, especially those related to subscriptions or memberships.
- Fines will be doubled: Bill 142 proposes doubling the maximum fines to further deter offences and egregious business behaviour, making the new maximum fines $100,000 for individuals and $500,000 for corporations. There has been little active enforcement of the existing offences under consumer protection laws, and it remains unclear whether these legislative changes will be accompanied by increased enforcement.
Several other important changes will be introduced by the new legislation, including changes to consumer lease requirements, increasing access to credit information and providing fairer exit options to consumers who are locked in long-term or indefinite timeshare contracts or leases for HVAC systems.
Bill 142 passed its first reading on October 23, 2023, so is at the beginning of its legislative journey. Businesses should audit existing consumer terms and contracts now to anticipate how to implement these changes, as the transition period for these changes remains uncertain.