Introduction
Ontario’s consumer protection framework imposes significant obligations on businesses that sell goods or services to consumers. The Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A (the "CPA") is the centrepiece of this framework, and every Ontario business that deals with consumers must understand its requirements. Failure to comply can result in contract rescission, regulatory enforcement, civil lawsuits, and reputational damage.
This article provides a comprehensive guide to the CPA and related consumer protection rules from the perspective of the business. We cover the Act’s scope and application, its prohibitions on unfair practices, the rescission and cooling-off rights it grants consumers, its mandatory disclosure requirements, its prohibition on waiver of consumer rights, and the enforcement mechanisms available to consumers and regulators. We also discuss practical compliance strategies to help your business stay on the right side of the law.
The Consumer Protection Act, 2002: Overview and Application
The CPA applies to consumer transactions—defined as any agreement between a consumer and a supplier for the supply of goods or services where the consumer is not acquiring the goods or services for business purposes. The Act is broad in scope: it covers agreements for the sale of goods, the provision of services, and both in-person and remote transactions (including internet and telephone agreements).
The CPA does not apply to business-to-business (B2B) transactions. If both parties are acting in the course of carrying on business, the CPA does not govern their agreement. However, businesses must be careful to correctly characterize the nature of a transaction. If a business sells goods or services to an individual who is acquiring them for personal, family, or household purposes, the CPA applies—regardless of the business’s intentions or the size of the transaction.
The CPA is supplemented by Ontario Regulation 17/05, which provides detailed rules for specific types of consumer agreements including internet agreements, direct agreements, time share agreements, and personal development services.
Unfair Practices: False, Misleading, and Unconscionable Conduct
Part III of the CPA prohibits two categories of unfair practices: false, misleading, or deceptive representations, and unconscionable representations.
False, Misleading, or Deceptive Representations (s. 14)
Section 14 of the CPA sets out a non-exhaustive list of representations that are deemed to be false, misleading, or deceptive. These include:
• Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, or benefits that they do not have.
• Representing that goods or services are of a particular standard, quality, grade, style, or model when they are not.
• Representing that goods are new when they are used, reconditioned, or reclaimed.
• Representing that goods or services are available for a reason that does not exist.
• Representing that a specific price advantage exists when it does not.
• Using exaggeration, innuendo, or ambiguity as to a material fact or failing to state a material fact when doing so is misleading.
• Representing that a transaction involves or does not involve rights, remedies, or obligations that differ from the actual rights, remedies, or obligations.
The list in s. 14 is illustrative, not exhaustive. Any representation that is false, misleading, or deceptive—whether or not it falls within the specific categories listed—may constitute an unfair practice.
Unconscionable Representations (s. 15)
Section 15 of the CPA addresses unconscionable representations. A representation is unconscionable if the supplier takes advantage of a consumer in circumstances where the supplier knows or ought to know that the consumer:
• Is not reasonably able to protect his or her interests because of disability, ignorance, illiteracy, inability to understand the language of the agreement, or similar factors.
• Is subjected to undue pressure to enter into the transaction.
• Is being charged a price that grossly exceeds the price at which similar goods or services are readily available to like consumers.
• Is being asked to enter into a transaction that is excessively one-sided in favour of someone other than the consumer.
Unconscionability under the CPA is assessed at the time of the transaction, taking into account the circumstances known to or that ought to be known by the supplier.
Rescission Rights and Cooling-Off Periods
One of the CPA’s most powerful consumer protections is the right of rescission—the right to cancel a consumer agreement and receive a full refund.
Rescission for Unfair Practices (s. 18(1))
A consumer who has entered into an agreement as a result of an unfair practice may rescind the agreement within one year after the date the agreement was entered into. This is a significant right: the one-year window is generous, and the consumer need not prove reliance on the unfair practice in the traditional common law sense. The unfair practice need only be a factor in the consumer’s decision to enter the agreement.
Cooling-Off Period for Internet Agreements
For internet agreements (agreements formed by text-based internet communication, such as online purchases), the CPA provides a seven-day cooling-off period during which the consumer may cancel the agreement without any reason, provided the supplier has not yet begun performance. The consumer’s right to cancel arises under s. 40 of the CPA. If the supplier failed to disclose the information required by s. 38 of the CPA (discussed below), the cooling-off period extends and the consumer may cancel the agreement within one year.
Cooling-Off Period for Direct Agreements
Direct agreements (agreements negotiated or concluded in person at a place other than the supplier’s place of business—such as door-to-door sales) carry a 10-day cooling-off period under s. 43 of the CPA. During this period, the consumer may cancel the agreement for any reason. As with internet agreements, failure by the supplier to comply with the mandatory disclosure requirements extends the consumer’s cancellation rights to one year.
Mandatory Disclosure Requirements
The CPA imposes detailed mandatory disclosure requirements for several types of consumer agreements. These requirements ensure that consumers have the information they need to make informed decisions and to exercise their cancellation rights.
Internet Agreements (s. 38)
Before a consumer enters into an internet agreement, the supplier must disclose specific information in a clear, comprehensible, and prominent manner. This information includes:
• The supplier’s name, telephone number, and address.
• A fair and accurate description of the goods or services, including all technical requirements and applicable delivery arrangements.
• An itemized list of the prices of the goods or services, including taxes and shipping charges.
• A description of each additional charge that applies or may apply, such as customs duties or brokerage fees.
• The total amount the consumer is required to pay, or where this is not ascertainable, the manner in which the amount will be calculated.
• The currency in which amounts are expressed, if not in Canadian dollars.
• The terms, conditions, and method of payment.
• The cancellation, return, exchange, and refund policies of the supplier, if applicable.
• The date of delivery or commencement of services, and any other relevant dates.
The supplier must also provide the consumer with a copy of the agreement within 15 days of the agreement being entered into. Failure to comply with these disclosure requirements may entitle the consumer to cancel the agreement within one year.
Direct Agreements
Direct agreements must also contain specific prescribed information, including the supplier’s name and contact information, a description of the goods or services, the total price, and the consumer’s cancellation rights. The agreement must be delivered to the consumer at the time it is entered into. Failure to comply with these requirements extends the consumer’s cancellation rights.
Prohibited Terms: The Waiver Prohibition
Section 7(1) of the CPA provides that the substantive and procedural rights given under the CPA apply despite any agreement or waiver to the contrary. In practical terms, this means that a consumer cannot contract out of the protections provided by the CPA. A term in a consumer agreement that purports to waive or limit the consumer’s rights under the CPA is void.
This prohibition has significant implications for businesses that use standard form contracts with consumers. You cannot include a clause that purports to eliminate the consumer’s right to rescission, shorten the cooling-off period, waive the consumer’s right to bring a class action, or exclude the implied terms and conditions imposed by the CPA. Such clauses, even if signed by the consumer, are unenforceable.
B2B vs. B2C: Where the CPA Applies and Where It Does Not
The CPA applies only to consumer transactions—transactions where a consumer acquires goods or services for personal, family, or household purposes. It does not apply to B2B transactions where both parties are acting in the course of carrying on business.
However, the line between B2B and B2C is not always clear. A sole proprietor who purchases a laptop may be doing so for personal use, business use, or both. A small business owner who contracts for home renovation services at a mixed-use property may be a "consumer" under the CPA for part of the transaction. Businesses should not assume that a transaction is outside the CPA simply because the purchaser is also a business owner.
When in doubt about whether the CPA applies, the safest approach is to comply with the CPA’s requirements. The cost of compliance is modest, while the cost of non-compliance—including rescission of the agreement, regulatory enforcement, and litigation—can be substantial.
Enforcement of Consumer Protection Law
The CPA is enforced through multiple channels, and businesses that violate it face exposure on several fronts.
Ministry of Public and Business Service Delivery
The Ministry of Public and Business Service Delivery (formerly the Ministry of Government and Consumer Services) is responsible for administering and enforcing the CPA. The Ministry can investigate complaints, issue compliance orders, and prosecute offences under the CPA. A person who commits an offence under the CPA is liable, on conviction, to a fine of up to $50,000 (for individuals) or $250,000 (for corporations), or to imprisonment for up to two years less a day, or both.
Civil Remedies
Consumers who have been the subject of unfair practices have a right of action for rescission of the agreement and/or damages under s. 18 of the CPA. The consumer may also seek recovery in Small Claims Court (for claims up to $35,000) or in the Superior Court of Justice. The CPA reverses the burden of proof in certain circumstances: where a consumer alleges that an unfair practice occurred, it is presumed that the consumer relied on the unfair practice, and the onus shifts to the supplier to prove otherwise.
Class Actions
Consumer protection claims are frequently pursued as class actions under the Class Proceedings Act, 1992, S.O. 1992, c. 6. Class actions allow a representative plaintiff to bring a claim on behalf of a large group of similarly affected consumers. The certification requirements for class actions in Ontario include an identifiable class, common issues, a representative plaintiff, and a finding that a class proceeding is the preferable procedure for resolving the common issues. Consumer protection class actions can expose businesses to very significant damages.
Compliance Strategies for Ontario Businesses
Proactive compliance with the CPA is far less expensive than reactive litigation. The following strategies can help your business stay compliant:
• Review all consumer-facing contracts, terms and conditions, and website disclosures for compliance with the CPA and Ontario Regulation 17/05.
• Ensure that all advertising and marketing materials are accurate, not misleading, and comply with both the CPA and the federal Competition Act.
• Implement clear, accessible cancellation and refund policies that comply with the CPA’s requirements for each type of consumer agreement (internet, direct, etc.).
• Train customer-facing employees on the CPA’s prohibitions against unfair practices. Employees should understand that both false representations and high-pressure sales tactics can trigger liability under the Act.
• Maintain proper records of consumer transactions, including copies of agreements, disclosures provided, and communications with consumers.
• Do not include terms in consumer agreements that purport to waive or limit the consumer’s CPA rights. Such terms are void and may invite regulatory scrutiny.
• Consult a Booni Law’s experienced team in consumer protection law before launching new products, services, or sales channels that involve consumer transactions.
Frequently Asked Questions
Q: Does the Consumer Protection Act apply to my business if I only sell to other businesses?
A: The CPA applies only to consumer transactions—where a consumer acquires goods or services for personal, family, or household purposes. If you sell exclusively to businesses acting in the course of carrying on business, the CPA does not apply. However, if any of your customers are individuals purchasing for personal use, the CPA applies to those transactions.
Q: Can I include a clause in my consumer contract that limits the consumer’s right to sue?
A: No. Section 7(1) of the CPA provides that the rights given under the CPA apply despite any agreement or waiver to the contrary. A clause that purports to limit or waive a consumer’s CPA rights—including the right to rescission, the right to bring a civil action, or the right to participate in a class proceeding—is void and unenforceable.
Q: What is the cooling-off period for an online purchase?
A: For internet agreements under the CPA, the consumer has a seven-day cooling-off period during which the consumer may cancel the agreement for any reason. If the supplier failed to provide the mandatory disclosures required by s. 38 of the CPA, the cancellation period extends to one year from the date the agreement was entered into.
Q: What happens if a consumer rescinds a contract under the CPA?
A: When a consumer validly rescinds a consumer agreement under the CPA, the agreement is treated as if it had never been entered into. The consumer is entitled to a full refund of all amounts paid. The supplier must provide the refund within 15 days of the rescission. The consumer must, if possible, return the goods to the supplier in the condition in which they were received, subject to reasonable wear and tear.
Q: Can a consumer sue me for an unfair practice even if they did not actually rely on my representation?
A: The CPA creates a presumption that the consumer relied on the unfair practice. Once the consumer establishes that an unfair practice occurred, the burden shifts to the supplier to prove that the consumer did not rely on the practice in deciding to enter the agreement. This reversed burden of proof makes it significantly easier for consumers to succeed in unfair practice claims.
Contact Booni Law
Consumer protection law creates real obligations and real exposure for Ontario businesses. Whether you need to review your consumer contracts, update your website disclosures, train your staff, or respond to a consumer complaint or regulatory inquiry, Booni Law can help. We provide practical, cost-effective consumer protection compliance advice to businesses across the Greater Toronto Area and Southwestern Ontario.
Booni Law serves clients across Ontario, including the Greater Toronto Area, Southwestern Ontario, and communities throughout the province. Email us at admin@boonilaw.com or call at +1 (226) 271-1751 to get started.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Reading this article does not create a solicitor-client relationship between you and Booni Law. The information in this article may not reflect the most current legal developments and should not be relied upon as a substitute for professional legal advice tailored to your specific circumstances. If you require legal advice, please contact Booni Law.
