Moving forward: Ontario's new Consumer Protection Act, 2023 receives royal assent

10 minute read
18 December 2023

In accordance with Ontario's 2019 Rebuilding Consumer Confidence Strategy, the Ontario government introduced Bill 142, Better for Consumers, Better for Businesses Act, 2023 (the "Bill") on Oct. 23, 2023, and passed the Bill on Dec, 6, 2023. As a result, Ontario's existing consumer protection legislation, the Consumer Protection Act, 2002 (the "Old CPA") will be repealed and replaced by the new Consumer Protection Act, 2023 (the "New CPA").

Certain details about how the New CPA will operate will be set out in one or more of the New CPA's regulations, which have not been published at this time. Further, the Ontario government has not set a date for when the New CPA will come into force. Instead, the Bill provides that the New CPA will come into force on a future date that will be proclaimed by the Lieutenant Governor of Ontario. As a result, while we know that substantial updates are coming to Ontario consumer protection law, the full details and timing remain uncertain as of this article.

As stated by the Ontario government after it first introduced the Bill, the changes aim to "strengthen protections for Ontarians… and make it easier for businesses to comply with consumer protection rules." While the majority of the changes build on existing protections afforded to consumers, businesses should start to consider the potential impact these changes will have on their existing consumer-related practices and agreements. Several of the key changes that could impact your business are outlined out below.

Prohibited contractual terms and restrictions in consumer contracts

The New CPA expressly prohibits certain terms from being included in consumer contracts, including those that:

  • provide for mandatory arbitration;
  • waive conditions or warranties (whether statutory or implied) or place monetary conditions on these conditions or warranties;
  • prevent a consumer from commencing a class action proceeding;
  • require a dispute to be adjudicated by a court other than the Ontario Superior Court;
  • prevent a consumer from publishing a review; and
  • prevent a consumer from filing a complaint with the Ontario Ministry.

Although the Old CPA deems some of the above terms as void and invalid, they are not expressly prohibited. Considering that the risks are low and the provisions often go unchallenged, businesses may still opt to include these terms in their consumer contracts. However, once the New CPA comes into force, the inclusion of any of these terms will be considered an offence and subject to regulatory enforcement (in addition to such terms being unenforceable). Consumers will also have the right to cancel any contract that contains a prohibited term within one year of entering the contract.

We expect the New CPA's regulations to include rules governing the unilateral amendment or continuation (i.e., renewal or extension) of consumer contracts by a business. Although these rules have not been published at this time, in a news release the Ontario government stated its intention to limit when businesses can initiate "one-sided contract amendments, renewals, and extensions without express consumer consent." While the details of this remain to be fleshed out in regulations not yet published, we expect that this will build on, or further restrict, the existing obligations in respect of such practices under the Old CPA and its regulations.

Unfair business practices expanded

The Old CPA and the New CPA both prohibit "unfair practices" which include: (a) false, misleading or deceptive representations, or (b) unconscionable representations. The New CPA seeks to expand the definition of "unfair practices" to also include "unconscionable acts." Under section 9(3) of the New CPA, "an unconscionable representation includes a representation that relates to an unconscionable act." Examples of prohibited unfair practices are set out under sections 8(2) and 9(2) and include:

  • price gouging;
  • inaccurately representing the condition of a consumer's goods;
  • making false claims of approval, licensing, or endorsement by, or association with the government; and
  • making false prize offers.

It should also be noted that certain acts and representations may be deemed as unconscionable regardless of what the person making the representation knew or ought to have known at the time. For example, under section 9(2)2 of the New CPA an unconscionable act includes "charging a price for goods or services that grossly exceeds the price at which similar goods or services are available from similar suppliers." Under the Old CPA, consideration may have been given to what the person making the representation knew or ought to have known about the price of other similar available goods and services. This knowledge element no longer appears to be relevant under this provision of the New CPA, though it is maintained for certain individual of the enumerated unconscionable acts.

The New CPA also expands the current list of prohibited unfair practices, including adding specific prohibitions on:

  • representing that a supplier or their goods or services are endorsed by or associated with the Government of Ontario or Canada, or another province or territory if they are not;
  • inaccurate representations as to the condition of goods; and
  • a representation relating to a gift card that states that another person will provide goods or services or will provide goods or services at a discounted or reduced price if the person making the representation knows or ought to know that the other person will not.

The practices set out above are all expressly prohibited under the New CPA. In a number of cases, these build or expand on existing prohibitions, and we would caution that "misleading" practices are already broadly prohibited under the Old CPA, as well as existing federal law. Furthermore, merchants should be acutely aware that under the New CPA, an unfair practice can occur in the absence of a consumer contract. This means that a merchant can still offend and be subject to enforcement under the New CPA, even in circumstances where they never entered into an agreement with the consumer.

The New CPA also provides consumers with an ongoing right to rescind a contract for one year after entering that contract if (a) an unfair practice has taken place, or (b) one year after an unfair practice takes place – whichever is later.

Consolidating rules for consumer contracts

Ontario's current consumer protection legislation sets out several categories of consumer contracts such as future performance agreements, gift card agreements, internet agreements, remote agreements, credit agreements and leases. The disclosure rules and requirements vary depending on the type of agreement.

The New CPA consolidates these by treating future performance agreements, internet agreements and remote agreements as "consumer agreements" with a single set of core rules and requirements, though details by contract type may appear in the regulations. These disclosure requirements will primarily be set out in regulations. However, because the regulations have not been published, it remains to be seen whether there will be any significant changes to the mandatory disclosure requirements typical for these agreements.

Gift card agreements (referred to as "prepaid purchase card contracts" under the New CPA) will be dealt with separately from the agreements mentioned above. Although already a rule in Ontario, the New CPA clarifies that gift cards cannot expire, regardless of whether the gift card is electronic or physical and regardless of how it is purchased.

Increased penalties

As with Ontario's existing consumer protection legislation, an individual who contravenes the New CPA may be subject to regulatory enforcement. Under the New CPA, individuals who commit an offence could be fined up to $100,000. Corporations who commit an offence under the New CPA could be fined up to $500,000. These maximum fines represent a one hundred per cent increase from the fines under Ontario's existing consumer protection legislation. The New CPA is also clear that where a consumer may commence an action under the New CPA, they may do so by class action.

Revisions to the New CPA

As previously mentioned, the Ontario government introduced the Bill on Oct. 23, 2023. On Nov. 2, 2023, the Bill was referred to the Standing Committee on Justice Policy. By Nov. 30, 2023, the Standing Committee had already amended the Bill and ordered a third reading. The Standing Committee made minimal changes to the proposed text of the New CPA. However, of note, the Standing Committee expanded the Lieutenant Governor in Council's already robust powers under section 107(1) of the New CPA. Under the newly introduced section 107(1) 47, the Lieutenant Governor in Council may make regulations that establish and govern rights to "commence an action regarding any matter" under the New CPA. This seems to further highlight the Ontario government's desire to allow consumers and regulators to be able to bring claims under the New CPA to court.

Looking ahead

In light of the increased penalties and significant changes, businesses should review their current consumer contracts and practices carefully. Although we anticipate that the regulations, which will contain many of the details necessary for compliance, will be published before the New CPA comes into force, and will contain many of the details required for full compliance, it is clear that the Ontario government is dedicated to increasing consumer protection laws in the province. We also anticipate that the New CPA's regulations will further impact how businesses approach consumer contracts. If you are unsure about how these changes may affect your business, please reach out to one of the authors or a member of Gowling WLG's Advertising and Product Regulatory team.

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