This webinar is brought to you by CLEONet www.cleonet.ca CLEONet is a web site of legal information for community workers and advocates who work with low-income and disadvantaged communities in Ontario. 2010, Community Law School (Sarnia-Lambton) Inc.
About our presenter… Margaret Capes, B.A. (Hons.), LL.B., M.Ad.Ed, is Legal Education Coordinator of Community Law School (Sarnia- Lambton) Inc. She also acts as Review Counsel for Lambton) Inc. She also acts as Review Counsel for Community Legal Services, as an adjunct professor in the clinical law program, and as faculty advisor for Pro Bono Students Canada and the Dispute Resolution Centre, all at the Faculty of Law, University of Western Ontario. She is the former Executive Director of Community Legal Assistance Sarnia. 2010, Community Law School (Sarnia-Lambton) Inc.
Hot Topics in Consumer Protection: Consumer Protection: Personal Development Service Agreements
Webinar Overview 1. Governing Law: the Consumer Protection Act, 2002 2. Examples of Prepaid Membership Agreements 3. Exceptions to Coverage Under the Act 4. Consumer Rights Regarding Personal Development Service Agreements: • Freedom from Unfair Business Practices • Contract Requirements • Cooling-off Period • Payment of Fees • Extension or Renewal • Presold Memberships • Warranty and Waivers • Unsolicited Goods or Services 5. Consumer Remedies • Cancellation • Rescission • Complaint to the Ministry • Civil Lawsuit 6. Appendix 7. Closing 2010, Community Law School (Sarnia-Lambton) Inc.
The Consumer Protection Act, 2002 and Personal Development Service Agreements • Personal development service agreements are governed by provincial law. • In Ontario, the Consumer Protection Act, 2002 is the governing law that protects consumers. • The CPA covers any agreement, the cost of which is more than $50. • The CPA both sets affirmative requirements for agreements it governs and prohibits a variety of unfair business practices, all of which we will discuss in further depth. 2010, Community Law School (Sarnia-Lambton) Inc.
Examples of Personal Development Service Agreements The CPA defines personal development service agreements (sometimes called prepaid membership agreements) as services that are provided for: • Health, fitness, diet, or matters of a similar nature; • Modeling and talent; • Martial arts, sports, dance, or similar activities; and • Any facility provided for instruction, or for the provision of services. 2010, Community Law School (Sarnia-Lambton) Inc.
Exceptions to Coverage Under the CPA Certain types of clubs and activities are excluded from the Act’s definition of a personal development service agreement, and are therefore exempted from the provisions of the Act . They are: • Nonprofit or cooperative organizations; • Private clubs primarily owned by the members; • Private clubs primarily owned by the members; • Charitable or municipal organizations, and any agency of the Province of Ontario; and • Golf clubs. 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Freedom From Unfair Business Practices � The Consumer Protection Act, 2002 specifically prohibits two types of unfair business practices, which we will discuss in more detail shortly: • Making a false, misleading or deceptive representation, and • Making an unconscionable representation. 2010, Community Law School (Sarnia-Lambton) Inc.
Unfair Business Practices: False, Misleading or Deceptive Representations • False, misleading and deceptive representations fall generally into four categories: • Representations as to the quality, characteristics, condition, or “special” nature of the goods or services; • The current or future availability of the goods or services; • The current or future availability of the goods or services; • The need for the goods or service; and • The cost, price advantage, or benefit of the good or service to the consumer. • Please refer to the Appendix for more a detailed list of false, misleading, and deceptive representations as defined by the CPA. 2010, Community Law School (Sarnia-Lambton) Inc.
Unfair Business Practices: Unconscionable Representations • Some business practices are so egregious that they are deemed unconscionable under the CPA . They include: • Taking advantage of the disability, ignorance, language barriers, or illiteracy of the consumer; • Grossly overcharging for the good or service; • Using excessively one-sided or otherwise inequitable contracts to the detriment of the consumer; contracts to the detriment of the consumer; • Obligations that the consumer has no reasonable probability of paying in full; • Misleading statements of opinion that the consumer relies on or is likely to rely on, to their detriment; and • Using pressure tactics to persuade the consumer to enter into the transaction. 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Contract Requirements The CPA requires all personal development service agreements to include: • The name of the consumer; • The name, address, and telephone number of the service provider, any other contact information such as facsimile number or email address, and if different, the name under which the provider carries on business; • The name of the person(s) who solicited, negotiated, or concluded the agreement with the consumer; • The address of the facility at which the services will be available; • A full description of the services purchased; • The date on or by which each of the purchased services will be available; 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Contract Requirements, Cont. • The total amount payable, and the terms and method of payment; • The date the agreement is entered into, and the commencement and expiry dates; • Any renewal or extension provisions; and • A statement of consumer rights as prescribed by the CPA, in a font size of not smaller than 10, with a heading of font size not less than 12. Special provisions are required if the agreement : • includes a trade-in arrangement; • if the service will not be available at the time a payment for the service is required; • if there are renewal or extension provisions; and/or • if goods are to be provided as part of the agreement. 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Cooling-off Period • The CPA provides for an automatic 10-day cooling-off period. • May cancel for any reason within 10 days of receipt of a written copy of the agreement, or within 10 days of the date that the services in the agreement become available, whichever is later. • Consumer is not required give a reason for canceling. • Consumer may not be charged a penalty for canceling. • May cancel within one year of entering into the agreement if a copy of the agreement is not received. • Any method may be used but written notice (facsimile, registered mail, or personal, receipted delivery) is recommended. • Sample cancellation letters are available on the Ministry of Consumer Services website 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Payment of Fees • If a club or service charges initiation fees in addition to the membership fee, the initiation fee may not be more than twice the annual membership fee. • Only one initiation fee may be charged to the consumer. • A club or service must offer the option of paying membership fees and any initiation fee in monthly installments. initiation fee in monthly installments. • An extra fee may be added for an installment payment option, but that fee may not be more than a 25 percent increase over what the upfront, lump-sum fee would be. • This gives the consumer a means of protecting against potential bankruptcy of the facility and loss of a full year’s prepaid fees. 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Extension or Renewal � A personal development services contract cannot have a term longer than one year. � If the consumer wishes to continue the membership or services, she or he must renew the contract. � If the contract contains an automatic renewal provision: • The service provider must give advance notice at least 30 days but not more than 90 days before the renewal date; 90 days before the renewal date; • The notice must give the renewal date, and clearly note any changes that are being made to the agreement; • The consumer has the right to not renew the agreement by so notifying the service provider. � If a membership agreement is renewed without proper notice having been given, the consumer may cancel the contract at any time and demand return of any prepaid but unused fees. 2010, Community Law School (Sarnia-Lambton) Inc.
Consumer Rights: Presold Memberships The CPA affords special protections for consumers who join a club that has not yet opened: • Owners may pre-sell memberships before a club is open, but the membership fees collected must be held by a registered trust corporation that acts as a trustee. • The trustee may not release the funds until the personal development services are made available to the consumer (e.g., the club opens to members). • If there is a delay in opening, the consumer may cancel the membership and demand a refund of prepaid fees. 2010, Community Law School (Sarnia-Lambton) Inc.
Recommend
More recommend
