Ontario businesses and those selling into the Ontario marketplace will be required to comply with expanded protection measures when the new provincial Consumer Protection Act (CPA) comes into force in July.

"This legislation will dramatically impact almost every aspect of business operations," says Daniel Shap, a Toronto lawyer specializing in corporate and information technology law.

"Whether you're a bricks-and-mortar retailer, sell services via the telephone or an online web-based merchandiser, you will need to rethink all your customer-relationship management tools, processes and policies," says Shap, a partner in Gardiner Roberts LLP.

The new act represents some of the most sweeping revisions to consumer-protection laws in Canada in about 30 years. The provisions were drafted after a lengthy consultation process by the Ministry of Consumer and Business Services, which included discussions with the Retail Council of Canada, the Consumers Council of Canada and the Canadian Marketing Association.

Daniel Shap

The legislation's reach requires all companies selling into the Ontario marketplace to conform to expanded consumer-protection measures, with providers of services facing the most significant adjustments as they become subject to the measures for the first time. The act comes into effect on July 30.

"Companies may need to develop new and innovative strategies for addressing the requirements of the CPA in a timely and cost-effective manner. Convictions for non-compliance may result in hefty fines and even imprisonment for the seller," Shap says. The maximum fine is $50,000 for individuals and $250,000 for companies.

The changes are necessary to bring the province's regulations into the 21st century, says Robert Harper, senior policy adviser to the ministry. He managed the consumer protection reform project that led to the new act.

Ontario's marketplace has changed dramatically over the past three decades, and laws enacted in the 1960s and 1970s have increasingly failed to protect consumers and have imposed obstacles for legitimate businesses, Harper says.

"We determined long ago that existing consumer protection legislation does not reflect the current realities of our digital economy," he says. "Our goal is to bring the province's legislation in line with the federal-provincial-territorial Consumer Measures Committee as it develops proposals for national harmonized consumer law and co-operative initiatives."

The new act unites and streamlines six existing consumer-protection laws into one overarching package: The Business Practices Act, Consumer Protection Act, Consumer Protection Bureau Act, Loan Brokers Acts, Motor Vehicles Repair Act and the Prepaid Services Act.

After July, new agreements between sellers and customers will stipulate that consumers cannot sign away their rights under the act - regardless of what is stated in an agreement or waiver.

Negative-option marketing, in which consumers are billed for goods and services they did not order, also will be outlawed. And repair contractors will not be able to charge consumers an amount more than 10 per cent above the original estimate.

The act also targets Internet sales and will require selling agreements that give consumers an opportunity to accept, decline or correct any errors in the online agreement before it is official. As well, on acceptance the supplier must deliver a copy of the agreement, in writing, to the consumer within 15 days of entering into the agreement.

The purchaser will also have the right - up to seven days after receiving a copy of the agreement - to withdraw from the sale.

In the travel sector, consumers will have a 10-day cooling-off period to cancel contracts for goods and services, such as time-share properties and vacation clubs.

Glen Grunwald, president and CEO of the Toronto Board of Trade, says the organization supports better protection for consumers. However, he has concerns about the new act.

"Since this legislation doesn't apply to business-to-business transactions, there's a lack of clarity in the wording pertaining to micro-businesses and sole proprietorships," he says. "It's not made clear whether a small-business owner or home-based enterprise is a business or a consumer when purchasing a good or service. This is a grey area that can raise problems."

Grunwald says he is disappointed the provincial government has not been telling businesses and consumers that tougher rules are coming in a few months.

He adds he would have preferred the government allow more time in bringing in the act.

"There's only a small window of opportunity here for small and medium-size businesses, most with limited resources, to access and get professional counsel regarding all the information outlined in this complex act, and what they need to do to comply," Grunwald says.

Doug DeRabbie, director of government relations with the Toronto-based Retail Council of Canada, agrees.

"We're getting the message out through our e-newsletters, our website and our publications to help our members learn about the legislation and what they must do to be in line with the law," he says.

"But what makes us uneasy is the public-complaints registry that will be posted on the government's website following a consumer's complaint and subsequent investigation by the ministry. We have addressed this with the provincial government, strongly advocating that spurious or frivolous complaints not be made public. We believe due diligence will be followed and our concerns addressed," DeRabbie says.

(The complaints registry also will be available by telephone to callers and in printed form for a period of at least 21 months, but not more than 27 months.)

The Canadian Marketing Association, which represents about 800 corporate members including marketers and those involved in e-business and Internet marketing, has sent numerous submissions to the ministry over the years about the Consumer Protection Act.

"This legislation sends out a clear message that consumer protection is of paramount importance in the marketplace," says John Gustavson, the organization's president and CEO.

"We applaud the government for the steps it has taken in putting into law a set of rules for ethical business practices. We're satisfied with it."

Eleanor Friedland, a board member with the Consumer Council of Canada in Toronto, also is pleased with the act's new provisions.

"It's great. I love it," she says. "Anything that helps protect consumers is welcome.

"The way we see it, what's beneficial to consumers is beneficial for business, too. Everyone wins," Friedland says.

CPA Highlights

* For the first time, sales of services - not just goods - are covered by the act.

* In addition to hefty fines and even imprisonment for non-compliance by the seller, failure to comply with certain provisions may result in the consumer receiving an automatic 30-day right to cancel the contract and the seller having to refund all amounts paid, including shipping and handling.

In some cases, the right to cancel can extend up to one year and the seller must refund any payments made under the agreement within 15 days of a cancellation.

* Express consent will be required from consumers to any material change (such as additions) in the ongoing provision of goods or services.

* The supplier will be unable to demand payment, or make any representation that suggests a consumer is required to make payment, even if the consumer uses or misuses, damages or misplaces goods.

Source: Daniel Shap, Gardiner Roberts LLP

Recommendations

* Conduct executive briefings with in-house legal department and senior marketing and sales departments.

* Review all existing sales policies, business processes, forms and client communication protocols.

* Recommend internal controls, administrative procedures and internal operating rules surrounding all information flows to and from the consumer.

* Counsel the management group on specifications and requirements governing online sales and Internet agreements.

Source: Daniel Shap, Gardiner Roberts LLP

(Jack Kohane can be reached at kohane@businessedge.ca)