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Ontario Launches Consultations for Regulations under the New Consumer Protection Act, 2023

As we previously wrote about, the Government of Ontario has introduced a new Consumer Protection Act, 2023 after three years of consultation with the public and stakeholders with the purpose of strengthening Ontario’s existing consumer protection legislation that has been in place for over 20 years. The new Consumer Protection Act, 2023 (the “New CPA”), also amends the current Consumer Reporting Act. The New CPA received Royal Assent on December 6, 2023, and it has been pending being declared in force since then.  

To bring the New CPA into force, the update and development of amended regulations are required.  The Ministry has now launched a public consultation to gather feedback from businesses and stakeholders on the first phase of regulatory proposals.

The Ministry is seeking input from legal and business stakeholders through this process. The intention of the new legislation is both to strengthen consumer rights, but also to make the process of compliance and disclosure under the New CPA more streamlined and business-friendly.

Many of the key practical terms for consumer contracts and disclosure subject to the New CPA will be determined by, and set out in, the regulations, and this consultation is therefore an important process as part of the implementation and interpretation of the New CPA.

The ministry is seeking input on several key proposals, including:

  • General Contract Rules: The ministry proposes combining key contract types into a single set of core contract rules that would apply to most consumer contracts. This would, in theory, lighten the regulatory review currently required when a consumer arrangement might be characterized as more than one type of service subject to the regulations (unless an exemption applies).
  • Additional Requirements for Certain Contracts: The ministry proposes that specific contract types would be subject to additional requirements beyond the core rules. The contract types that would need to meet the additional rules under consideration include agreements for loan brokering, credit repair, contract breaking, direct contracts and purchase-cost-plus leases. Some forms of contracts, on the other hand, will not be subject to the core rules.
  • Price Escalation Clauses and Appropriate Disclosures to Consumers: The ministry proposes strengthening rules and disclosure requirements for price escalation clauses. This may include restrictions on price increases or providing additional and clear notice to consumers before a price increase.
  • New Contract Amendment and Continuation Rules: The ministry proposes to require businesses and service providers to obtain express consumer consent before making an amendment to fixed-term contracts. However, they also propose certain exemptions. For instance, the ministry acknowledges that advance notice to changes is acceptable for indeterminate-term contracts.
  • Purchase-Cost-Plus Lease Rules (“PCPL”): The ministry proposes new rules and exemptions for PCPL, which are leases whereby the total amount payable exceeds 90% of the estimated retail value of the leased goods. This is a new category of long-term leases subject to the New CPA.
  • Timeshare Contract Rules: The ministry proposes improving disclosure requirements and limiting termination costs for these contracts on or after the 25-year anniversary.
  • Monetary Threshold: The ministry proposes maintaining the current monetary threshold for consumer contract rules and makes clarifications regarding payments and tax implications.
  • Exemptions from the New CPA: The ministry proposes that generally all exemptions in the current CPA will be maintained, with a few key changes.
  • Transition Rules: The ministry is seeking stakeholder feedback on the impact of applying New CPA rules to existing contracts and potential risks. If the New CPA applies retroactively, it may require all existing terms and conditions for regulated consumer arrangements to be revised. In addition, it is unclear whether consumers are entitled to be made whole for the rights they have under the New CPA that they didn’t otherwise have under the current CPA.
  • Increasing Transparency: The ministry proposes improving and expanding information available to the public record through a variety of changes aimed at enhancing public education, such as posting enforcement and compliance measures, and information about businesses subject to consumer protection regulations.
  • Continuing Existing Policies: The ministry proposes maintaining the policies of the existing CPA and making only minor adjustments in certain instances.
  • Informing Future Regulations: The ministry proposes soliciting high-level feedback on the barriers facing Contract Cancellation to inform the development of future regulations.

These regulations will shape the scope and implementation of the New CPA framework. They will have important impacts for businesses and consumers alike, and will bring changes to market practices for retail goods and services.

The deadline to submit consultation feedback is February 10, 2025. If you need advice about or assistance with the New CPA or are interested in participating in the consultation individually or through a group, McCarthy Tétrault’s consumer protection specialists are here to help.

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