6

 

 

First Session, 47th General Assembly

61 Elizabeth II, 2012

BILL 6

AN ACT TO AMEND THE CONSUMER PROTECTION
AND BUSINESS PRACTICES ACT

Received and Read the First Time...................................................................................................

Second Reading.................................................................................................................................

Committee............................................................................................................................................

Third Reading.....................................................................................................................................

Royal Assent......................................................................................................................................

HONOURABLE PAUL DAVIS

Minister of Service Newfoundland and Labrador

Ordered to be printed by the Honourable House of Assembly

 

 

EXPLANATORY NOTES

This Bill would amend the Consumer Protection and Business Practices Act to add a division governing distance service contracts.

This Bill would

·         prescribe information required to be disclosed by a supplier to a consumer in a distance service contract;

·         establish the circumstances under which a consumer or supplier may cancel or amend a distance service contract;

·         establish rules regarding cancellation fees;

·         establish rules regarding the use of security deposits;

·         prescribe information respecting warranties which is required to be disclosed by a supplier to a consumer; and

·         prescribe information required to be included when advertising goods or services which may be sold or provided under a distance service contract.

A BILL

AN ACT TO AMEND THE CONSUMER PROTECTION AND BUSINESS PRACTICES ACT

Analysis


        1.   S.2 Amdt.
Definitions

        2.   S.23 R&S
Definition

        3.   Division heading R&S

        4.   S.28 R&S
Definition

        5.   Division 3 Added

Division 3
Distance Service Contracts
35.1   Interpretation
35.2   Disclosure of
          information
35.3   Form of contract
35.4   Renewal of contract
35.5   Amendment of
          contract by supplier
35.6   Amendment of
          contract by consumer
35. 7  Cancellation of
          contract by supplier
35.8   Cancellation of
          contract by consumer
35.9   Cancellation
          fee – fixed term
          distance service
          contract
35.10                     Cancellation
          fee – indeterminate
          term distance service
          contract
35.11                     Security deposit
35.12                     Repair of goods
35.13                     Warranties
35.14                     Advertising
35.15                     Direct sales contract
35.16                     Distance sales
          contract

        6.   Commencement


Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

SNL2009 cC-31.1
as amended

        1. Paragraph 2(i) of the Consumer Protection and Business Practices Act is repealed and the following substituted:

              (i)  "services" means services provided to a consumer for primarily personal, family or household purposes including

                      (i)  for the maintenance or repair of goods or real property owned by a consumer,

                     (ii)  in conjunction with the use of social, recreational or physical fitness facilities,

                    (iii)  in conjunction with the use of cell phones, residential phones, internet, cable and satellite television and remote surveillance,

                    (iv)  in respect of the movement, transport or storing of goods, or

                     (v)  for educational purposes; and

 

        2. Section 23 of the Act is repealed and the following substituted:

Definition

      23. In this Division, Division 3, Part VIII and Part X, "direct sales contract" means an agreement between a consumer and a supplier that is negotiated or concluded in person at a place other than

             (a)  the supplier's place of business; or

             (b)  a market place, an auction, trade fair, agricultural fair or exhibition.

 

        3. The heading in Division 2 is repealed and the following substituted:

Division 2
Distance Sales Contracts

 

        4. Section 28 of the Act is repealed and the following substituted:

Definition

      28. In this Division and Division 3, "distance sales contract" means a contract for the supply of goods or services between a supplier and a consumer that is not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into, but does not include a prepaid purchase card.

 

        5. The Act is amended by adding immediately after section 35 the following:

Division 3
Distance Service Contracts

Interpretation

   35.1 (1) In this Division

             (a)  "cancellation fee" means the total charges that the supplier may charge to the consumer upon cancellation of a distance service contract;

             (b)  "distance service contract" means a service contract for cell phones, residential phones, internet, cable and satellite television and remote surveillance, and includes the goods used in conjunction with the service contract;

             (c)  "fixed term distance service contract" means a distance service contract that has a specified term;

             (d)  "indeterminate term distance service contract" means a distance service contract that does not have a specified term;

             (e)  "security deposit" means a sum of money that a supplier obtains from a consumer that is in addition to the amount payable in respect of the goods or services provided for in the distance service contract; and

              (f)  "rebate" means a discount on the price of goods or services.

             (2)  This Division applies to

             (a)  all distance service contracts which are entered into after the coming into force of this Division; and

             (b)  all distance service contracts which are renewed after the coming into force of this Division, notwithstanding that those contracts were entered into before the coming into force of this Division.

Disclosure of information

   35.2 (1) A supplier shall disclose the following information to a consumer:

             (a)  the supplier's name, business address, telephone number and, where applicable, fax number and e-mail address;

             (b)  the date and place of the distance service contract;

             (c)  a detailed description of each service to be provided;

             (d)  the monthly rate for each service to be provided, including the monthly rate for each optional service, or the monthly cost where the rate is not calculated on a monthly basis;

             (e)  the monthly rate for each associated cost or the monthly cost where the rate is not calculated on a monthly basis;

              (f)  the total amount the consumer must pay each month;

             (g)  the applicable restrictions on the use of the services and the geographical limits, including local service coverage areas, long distance areas and roaming areas, within which they may be used;

             (h)  where applicable, the description and price of the goods sold or offered at a rebate on the purchase of the service and a statement that goods to which a rebate is applied are rebated goods, not free goods;

              (i)  where applicable, the description of each service offered at a rebate;

              (j)  where applicable, the nature of each rebate provided by the supplier in consideration of the distance service contract, including a partial rebate on the sale or lease price of the goods or services purchased or leased at the time the distance service contract is entered into;

             (k)  the total value of each rebate to be used to calculate the cancellation fee that may be charged to the consumer under subsection 35.9(2);

              (l)  the manner of obtaining information on the rate for the services that are not provided under the distance service contract and the rate for services that are subject to restrictions or geographical limits;

            (m)  the term and expiry of the distance service contract;

             (n)  without limiting the scope of sections 35.5 to 35.10, the circumstances which allow the consumer or the supplier to cancel or amend the distance service contract and the related terms and costs or fees, if any;

             (o)  the obligations that must be fulfilled by the consumer to terminate the distance service contract upon its expiry;

             (p)  information related to the existence of applicable warranties, including manufacturer’s warranties, which shall include information respecting the nature and duration of those warranties;

             (q)  rates for exceeding usage limits, where applicable;

              (r)  customer service information for the supplier of services and the supplier of goods;

             (s)  customer service obligations of the supplier of services and the supplier of goods;

              (t)  with respect to distance service contracts for cell phones,

                      (i)  notification that roaming charges may apply,

                     (ii)  notification of the number of included airtime minutes and data usage, where applicable, and

                    (iii)  per use charges for incoming text messages, emails, and subscription text messages, where applicable;

             (u)  a statement indicating whether the goods or services are subject to a technological or physical feature restricting the functioning of those goods or services to a service provided by the supplier or another supplier;

             (v)  a description of any one-time costs charged by the supplier, including a sign-up fee or a cost for an action required on the part of the supplier to activate the service under the agreement;

            (w)  a statement that unauthorized or incorrect charges will be reversed within 30 days of notification by the consumer to the supplier;

             (x)  the supplier's policy respecting unused credit balances on contract expiry;

             (y) the fee charged for paper invoices and detailed account statements; and

             (z)  any restrictions respecting free or included services.

             (2)  The description in subparagraph (1)(h) shall state

             (a)  whether the goods offered at a rebate are new or reconditioned; and

             (b)  the regular price of the goods.

             (3)  A distance service contract shall include the consumer’s name and address and the information in subsection (1).

             (4)  The information in subsection (1) shall be printed in a clear and legible manner at the beginning of the distance service contract in at least a 10 point font.

Form of contract

   35.3 (1) A distance service contract shall be

             (a)  written in plain language which is clear and concise; and

             (b)  provided in paper form.

             (2)  The requirement to provide a contract in paper form under paragraph (1)(b) is not satisfied by the provision of electronic information as authorized by section 9 or 10 of the Electronic Commerce Act.

             (3)  A distance service contract shall be completed in duplicate and upon execution by both the supplier and the consumer the supplier shall provide a copy to the consumer.

             (4)  The consumer's signature shall appear following the conditions stated in the contract.

             (5)  This section does not apply to a distance service contract which is also a distance sales contract.

Renewal of contract

   35.4 (1) The supplier shall, between 90 and 60 days before the expiry date of the distance service contract, provide written notice to the consumer of

             (a)  the expiry date of the contract; and

             (b)  where applicable, the supplier's intent to renew the contract for an indeterminate term.

             (2)  A fixed term distance service contract with a term exceeding 60 days shall not contain a clause which allows the contract to be automatically renewed upon expiry unless the renewal is for an indeterminate term.

Amendment of contract by supplier

   35.5 (1) A distance service contract shall not contain a clause which allows the supplier to unilaterally amend the contract unless the clause

             (a)  states the elements of the distance service contract that may be amended unilaterally;

             (b)  provides that the supplier must send written notice to the consumer, at least 30 days before the effective date of the amendment, stating

                      (i)  the new or amended clause,

                     (ii)  the former version of the clause,

                    (iii)  the effective date of the amendment, and

                    (iv)  the consumer's rights where he or she does not agree with the amendment; and

             (c)  provides that where the amendment increases the consumer's obligations or reduces the supplier's obligations the consumer may refuse the amendment and cancel the distance service contract without cost, penalty or fees, provided the consumer gives written notice to the supplier no later than 30 days after the effective date of the amendment.

             (2)  Notwithstanding subsection (1), the supplier shall not unilaterally amend the price, term or nature of the goods or services of a fixed term distance service contract.

             (3)  An amendment to a distance service contract that contravenes this section is invalid.

Amendment of contract by consumer

   35.6 (1) A consumer may amend a distance service contract in relation to optional services or, if permitted by the supplier, other services at any time without incurring a cost, penalty or fee.

             (2)  Notwithstanding subsection (1), where a consumer amends a distance service contract to add services the consumer shall pay the fee associated with each added service.

Cancellation of contract by supplier

   35.7 (1) An indeterminate term distance service contract shall not include a clause which allows the supplier to unilaterally cancel the contract unless the clause states that the contract may only be unilaterally cancelled where

             (a)  the consumer fails to meet his or her obligations under the contract; or

             (b)  the supplier provides written notice of the cancellation to the consumer at least 60 days before the cancellation date.

             (2)  A fixed term distance service contract shall not include a clause which allows the supplier to unilaterally cancel the contract unless the clause states that the contract may only be unilaterally cancelled where

             (a)  the consumer fails to meet his or her obligations under the contract; or

             (b)  the supplier no longer has the technical ability to provide the service.

Cancellation of contract by consumer

   35.8 (1) A consumer may cancel a distance service contract at any time for any reason by giving written notice to the supplier.

             (2)  Cancellation of a distance service contract is effective on the date the              notice is provided to the supplier unless a later date is specified in the notice.

             (3)  Where a supplier receives written notice under this section the supplier shall confirm receipt of that notice with the consumer.

             (4)  Where a consumer cancels a distance service contract under subsection (1), supplier may only charge a cancellation fee in accordance with section 35.9 or 35.10, and that fee shall be calculated in accordance with the applicable section.

Cancellation fee – fixed term distance service contract

   35.9 (1) Where a consumer cancels a fixed term distance service contract, the supplier may only charge the consumer a cancellation fee in accordance with subsection (2) or (3).

             (2)  Where a supplier has provided the consumer with a rebate on the sale price of the goods necessary for the use of the service the maximum cancellation fee that the supplier may charge is determined by the following formula:

C = R x M/T

Where

                    C =  maximum cancellation fee;

                    R =  amount of rebate;

                  M =  number of complete months remaining in the contract; and

                    T =  term of the contract.

             (3)  Where the supplier has not provided a rebate on the sale price of the goods necessary for the use of the service the maximum cancellation fee that the supplier may charge is limited to the lesser of

             (a)  $50; or

             (b)  an amount representing not more than 10% of the amount obtained by multiplying the number of complete months remaining in the contract by the monthly rate of the contract.

Cancellation fee – indeterminate term distance service contract

35.10 (1) Where a consumer cancels an indeterminate term distance service contract the supplier may only charge the consumer a cancellation fee where

             (a)  the supplier allows an unpaid balance on the sale price of the goods necessary for the use of the service in consideration of the indeterminate term distance service contract; and

             (b)  the balance is progressively reduced by a certain amount with each month that elapses on the contract.

             (2)  The cancellation fee permitted in subsection (1) shall not exceed the unpaid balance of the sale price of the goods at the time the contract was entered into less the amount obtained by multiplying 1/48 of that balance by the number of months of the contract that have elapsed.

             (3)  For the purpose of subsection (2), the month in which the contract is cancelled is considered to be a month elapsed.

Security deposit

35.11 (1) A supplier shall return a security deposit to the consumer with interest, less all amounts due under the contract, within 30 days of the expiration or cancellation of the contract.

             (2)  Notwithstanding paragraphs 35.7(1)(a) and 35.7(2)(a), a supplier shall not cancel a distance service contract for failure to pay amounts owing under the contract where the consumer paid a security deposit and the amount owing does not exceed the amount of the security deposit.

             (3)  A supplier shall provide written notice to the consumer where the supplier uses all or part of the security deposit to pay amounts owing under the contract.

             (4)  For the purpose of subsection (1), interest shall be calculated annually as the Bank of Canada rate plus 1% and interest shall be calculated from the date the consumer provides the security deposit to the date the supplier returns the security deposit.

Repair of goods

35.12 (1) A supplier shall not demand payment of services that the consumer was deprived of during the repair of goods sold, leased or supplied to the consumer at the date the contract was entered into or during the term of the contract where

             (a)  the goods are under warranty;

             (b)  the goods are necessary for the use of the services purchased; and

             (c)  the supplier did not provide replacement goods to the consumer during the repair period or provided replacement goods that were not compatible with the purchased services.

             (2)  A supplier shall not charge a fee for providing replacement goods when those goods are provided to the consumer during the repair period of goods which are under warranty.

Warranties

35.13 (1) Information relating to applicable warranties referred to in paragraph 35.2(1)(p) shall be disclosed by a supplier to a consumer both orally and in writing before the supplier offers additional warranties to the consumer for sale.

             (2)  Where a supplier has disclosed information respecting warranties under subsection (1) and that supplier is requested to do so by a consumer, the supplier shall inform the consumer how to examine all the other elements of the warranty.

             (3)  Failure to disclose applicable warranties before offering additional warranties for sale is an unfair business practice under subsection 7(1) of this Act.

Advertising

35.14 (1) Where a supplier advertises a price for particular goods or services, the advertised price shall include

             (a)  the total amount on a monthly or other periodic basis that the consumer is required to pay for the goods or services, excluding tax; or

             (b)  where the consumer is not required to pay for the goods or services on a monthly or other periodic basis, the total amount, excluding tax, that the consumer is required to pay for the goods or services.

             (2)  The amount referred to in subsection (1) shall be advertised in priority to the amounts upon which that price is based.

             (3)  Where a rebate is advertised, a supplier shall specify in the advertisement that the good to which the rebate is applied is a rebated good, not a free good.

Direct sales contract

35.15. (1) Where a distance service contract is also a direct sales contract this Division and Division 1 apply. 

             (2)  Notwithstanding subsection (1), where a distance service contract that is also a direct sales contract is cancelled in accordance with section 26, the supplier shall not charge the consumer a cancellation fee under section 35.9 or 35.10.

Distance sales contract

35.16 (1) Where a distance service contract is also a distance sales contract this Division and Division 2 apply.

             (2)  Notwithstanding subsection (1), where a distance service contract that is also a distance sales contract is cancelled in accordance with section 32, the supplier shall not charge the consumer a cancellation fee under section 35.9 or 35.10.

Commencement

        6. This Act comes into force 3 months after the day on which it receives Royal Assent.