Difference between pages "Consumer Protection from Deceptive and Unconscionable Acts (11:IV)" and "Direct Sales, Future Performance, and Time Share Contracts (11:V)"

From Clicklaw Wikibooks
(Difference between pages)
Jump to navigation Jump to search
 
 
Line 2: Line 2:
{{LSLAP Manual TOC|expanded = consumer}}
{{LSLAP Manual TOC|expanded = consumer}}


== A. Does the Act Govern the Contract? ==
Since the ''BPCPA'' has replaced the ''Consumer Protection Act'', the ''BPCPA'' covers door-to-door sales, payday loans, credit cards, income tax refund services (although the federal Tax Rebating Discounting Act, RSC 1985, c T-3 regulates the actual amount which can be refunded), food plan contracts, unsolicited goods, and similar activities. The primary remedy for consumers in the ''BPCPA'' regarding these types of activities is the right to avoid or cease contracts for direct sale or for future services, after giving notice in the manner required by the statute. A single contract may fall under more than one category, and in that case, will attract the requirements and cancellation provisions of each applicable section.


For a contract to fall under the ''Business Practices and Consumer Protection Act'' [''BPCPA''], the contract must be 1) a consumer transaction, between 2) a consumer and 3) a supplier, as defined by section 1. Each of the three criteria must be fulfilled before relying on the ''BPCPA''. The only exceptions to the applicability of the ''BPCPA'' are those listed under s 2 of the ''BPCPA'' and include credit reporting and debt collections practices. These sections of where the ''BPCPA'' apply regardless of whether the transaction or matter involves a consumer or not. Additionally, section 2 (2) outlines the limited application of the ''BPCPA'' to contracts involving the sale, lease, mortgage of or charge on land or chattel real.
:'''NOTE:''' When exercising cancellation rights under the ''BPCPA'' consumers should be apprised of ss 27 and 28. In most cases, the contract is effectively rescinded by the cancellation; goods must be returned undamaged and payment must be refunded in full. Furthermore, if a supplier will not provide a refund as required under Division 2 of the ''BPCPA'', section 55 of stipulates that a consumer may be entitled to recover the refund as a debt due.


=== 1. Consumer Transaction ===
== A. Direct Sales ==


A consumer transaction is a dealing that:
When consumer is approached by a salesperson, instead of making a conscious decision to seek out a product or service, they may be taken unawares and can be vulnerable to being taken advantage of. The ''BPCPA'' recognizes this risk by imposing disclosure requirements and allowing a consumer to cancel the contract in ways the common law of contract does not permit.  
*a) involves a supply of goods, services, or real property by a supplier to a consumer for primarily personal, family or household purposes, '''or'''
*b) is a solicitation, offer, advertisement or promotion by a supplier with respect to the above-mentioned types of transactions.  


Except in Parts 4 and 5 of the ''BPCPA'', a consumer transaction includes a solicitation of a consumer by a supplier for a contribution of money or other property by the consumer.
A direct sales contract is defined in s 17 as:


The Act '''does not''' apply to securities as defined by the ''Securities Act'', RSBC 1996, c 418 or contracts of insurance under the ''Insurance Act'', RSBC 1996, c 226.
...a contract between a supplier and a consumer for the supply of goods or services that is entered into in person at a place other than the supplier's permanent place of business, but does '''not''' include any of the following:
*(a) a funeral contract, interment right contract or preneed cemetery or funeral services contract;
*(b) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than an amount of $50 (''Consumer Contracts Regulation'' BC Reg 272/2004 s 4 [''CCR'']);
*(c) a prepaid purchase card;


=== 2. Consumer ===
The ''BPCPA'' sets out a lengthy list of requirements under ss 19 and 20 for the content of direct sales contracts, such as the name, address, and telephone number of the seller, the name (in a readable form) of the individual who signs the contract on behalf of the supplier, a detailed description of the goods or services to identify them with certainty, the price, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is '''not''' an exhaustive list; please consult the ''BPCPA'' and regulations.  


The consumer may reside inside or outside BC. A consumer is an individual, other than a supplier, who participates in a consumer transaction for '''primarily personal, family, or household''' purposes. The definition of consumer in section 1 does not include a guarantor of the consumer who actually participated in the transaction.  
Under s 5 of the ''CCR'', there are several exemptions to the applicability of the ''BPCPA'' to direct sales contract. Such exemptions include certain classes of direct sellers who are selling goods or services for which they are licensed, registered, or incorporated (s 5(4)), and direct sales contracts that are entered into in certain places, such as agricultural shows or fairs, trade shows, and craft fairs. Direct sellers are also exempt if the seller attends the place following a request that was made at least 24 hours in advance by the consumer or a friend or relative of the consumer who is not an associate of the direct seller. For a full list of exemptions, please consult the ''CCR''.


=== 3. Supplier ===
=== 1. Right of Cancellation - Direct Sales ===


A supplier means a person, whether in BC or not, who in the course of business participates in a consumer transaction by:
Under s 21 of the ''BPCPA'',
*a) supplying goods, services, or real property to a consumer; or
*(a) the purchaser may cancel the contract within 10 days after receiving a copy of the contract. The purchaser need not offer explanations for their decision. The vendor then has 15 days after the date of cancellation to refund all money without deduction.
*b) soliciting, offering, advertising, or promoting with respect to a transaction referred to in paragraph (a) of the definition of “consumer transaction”.  
*(b) if a delivery date is specified in the contract and not all of the goods/services are delivered/performed within 30 days of this date, the purchaser may cancel the contract within one year after the date a copy of the contract was received, provided that the purchaser has not accepted or used the goods/services;  
*(c) if the contract does not contain information required under s 19 and 20(1) of the Act, the buyer may cancel within one year of the date of the contract.  


A supplier also includes the successor to, or assignee of, any rights or obligations of the supplier and, except in Parts 3 to 5, includes a person who solicits a consumer for a contribution of money or other property.  
A direct sale is unenforceable by the seller if the buyer is required to make a down payment in excess of a prescribed amount (''BPCPA'', s 20(3)(b)). Section 4(2) of the ''CCR'' sets the amount of down payment prescribed under s20(3)(b) as either $100 or 10% of the total price.


The definition of supplier in section 1 requires that the transaction occur “in the course of business”. Thus, private sales and transactions made by people who are not in the business of dealing with such goods are generally exempt from the ''BPCPA''. If a consumer buys a used car advertised in a newspaper ad placed by a private person, the consumer will likely be restricted to the remedies found in the SGA or at common law. Some remedies in the ''SGA'' are also available only when goods are sold in the ordinary course of business.  
:'''NOTE:''' Whether the purchaser has '''accepted''' goods is determined by the definition in the ''Sale of Goods Act'' (s 39).  


Several suppliers can be involved in one transaction. Therefore, in order for the consumer to sue, they need not have a contract with the  supplier who made a deceptive representation or committed an unconscionable act. For example, a consumer buys a car from a dealer and the contract is assigned to a financial institution. The vendor would be a supplier, as would the finance company attempting to collect on the contract (see section 15). Since privity of contract is not necessary, each of the suppliers would be liable under the ''BPCPA'' if they engaged in deceptive or unconscionable practices.  
The BPCPA does not make oral executory contracts unenforceable. However, s 20(3) requires that the seller give a written copy of the contract to the buyer at the time of signing. Otherwise the contract is not binding on the buyer.


According to section 6(2), advertisers who, on behalf of another supplier, publish a deceptive or misleading advertisement are not liable for damages, court actions, or offences, if they are acting in good faith when they accept advertisements for publication. If, however, they knew or ought to have known that the advertisement had the capability, tendency, or effect of deceiving or misleading, then they too may be liable as a supplier under the ''BPCPA''.
Section 54 requires that the buyer provide notice of cancellation to the seller, and declares that it may be delivered by any method that permits the cancelling party to produce evidence that the contract was cancelled. Notice by registered mail, electronic mail, personal delivery, and fax is explicitly permitted. Nowhere does the BPCPA explicitly state that a notice of cancellation shall be in writing, but a buyer should be cautious and deliver written  notice. The section explicitly permits that the notice can be given to the seller directly, or to the postal, fax, or electronic mail address of the seller  shown in the contract. When a buyer rescinds a contract under s 21, that section also provides that the goods may be retained until all of the money paid is refunded.


== B. Defining a “Deceptive or Unconscionable Act or Practice” ==
In ''[https://www.canlii.org/en/bc/bcca/doc/1991/1991canlii1408/1991canlii1408.html?autocompleteStr=Woodward%20v%20International%20&autocompletePos=1 Woodward v International Exteriors (British Columbia) Ltd]'', (1991), 53 BCLR (2d) 397, 1 BLR 254 (CA) at para 10, verbal notice of termination of an agreement was sufficient for the consumer to terminate this form of contract. Note that verbal notice may not be sufficient in all instances and written notice remains advisable.


For the consumer to have a remedy, the supplier’s conduct must involve deceptive or unconscionable acts or practices.  
== B. Future Performance Contracts ==


Section 4 of the ''BPCPA'' describes “deceptive” acts or practices. Section 8 of the ''BPCPA'' describes “unconscionable” acts or practices.
A future performance contract is defined in s 17 as:


=== 1. Deceptive Acts ===
...a contract between a supplier and a consumer for the supply of goods or services for which the supply or payment in full of the total price payable is not made at the time the contract is made or partly executed, but does '''not''' include:
*(a) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than a prescribed amount of $50 (''CCR' s 6);
*(b) a contract for the supply of goods or services under a credit agreement, as defined in s 57 (definitions), if the goods or services have been supplied;
*(c) a time share contract; or
*(d) a prepaid purchase card.


A deceptive act or practice is a representation (whether oral, written, visual, descriptive, or other) or any conduct by the supplier that has the capacity, tendency, or effect of deceiving or misleading a consumer or guarantor. 


Section 4(3) sets out an extensive but non-exhaustive list of deceptive practices.
Future services contracts are subject to some important statutory requirements under Part 4, Division 2 of the ''BPCPA''.  


If a certain practice is not listed in 4(3), it may still be considered deceptive. The term “deceptive act or practice” was also found in BC’s old ''Trade Practices Act'', which was repealed by the ''BPCPA'' in 2004. Thus, looking back at the old Trade Practice Act jurisprudence can shed light on the meaning of “deceptive act or practice.”
The ''BPCPA'' sets out a long list of requirements under ss 19 and 23 for the content of future services contracts, such as the name, address, and telephone number of the seller, a detailed description of the goods or services to identify them with certainty, the price, supply date, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is '''not''' an exhaustive list; please consult the Act.  


The term was interpreted by the court in ''British Columbia (Director of Trade Practices) v Household Finance Corp'', [1976] 3 WWR 731, [1976] BCJ No 1316 (SC) at paras 19-23 [''Household Finance''] and later affirmed by the BC Court of Appeal. Household Finance suggests that a practice is deceptive for purposes of the BPCPA if it causes the consumer to commit an error of judgment.
Under s 23(4), a future performance contract is not enforceable by the seller if a rebate or discount is given on the condition of some event  occurring after the time the buyer agrees to buy (usually a referral selling scheme whereby the purchaser aids the seller in making a further sale).  


A plaintiff consumer relying on the supplier’s deceptive practice for an action should show:
If the future performance contract does not contain the required information (ss 19 and 23), then a consumer may cancel the contract by giving notice of cancellation to the supplier within one year of the date that the consumer receives a copy of the contract (s 23(5)). Section 54 sets out the required form and procedure for giving notice. (See [[{{PAGENAME}}#1. Right of Cancellation - Direct Sales | Section V.A.1]]).
*a) that they were actually deceived by the deceptive practice;
*b) that they relied on the deception to the extent that an error in judgment resulted from the deception; and  
*c) that the error in judgment caused loss.  


The Director need only show that a deceptive practice would tend to cause consumers to make an error in judgment, but does not need to show that any consumer made an error in judgment, to enforce the Act against a supplier.
== C. Continuing Services Contracts: Gym Memberships, Travel or Vacation Clubs==


The ''BPCPA'', similarly to the ''Trade Practices Act'', should be interpreted as imposing “a high standard of candour, especially on suppliers who choose to commend their wares” (''[https://www.canlii.org/en/bc/bcca/doc/1991/1991canlii178/1991canlii178.html?autocompleteStr=Rushak%20&autocompletePos=1 Rushak v Henneken]'', [1991] 6 WWR 596, [1991] BCJ No 2692 (CA) at para 17 [''Rushak'']).
These contracts are called continuing services contracts because, while you may pay now, the contract extends into the future. This type of contract is often used when one joins a karate club or a dance studio, or buys a membership in a vacation club.  


Where there is an embellishing endorsement of the goods, and the supplier knows the goods may be defective in an important respect, these facts must be disclosed. For the consumer to set aside the consumer transaction on the basis that the supplier engaged in a deceptive act or practice, the representation must be material – what is material depends on the individual circumstances of the transaction (''Rushak'').  
Continuing services contracts must not exceed 24 months in duration. However, a contract can allow the consumer to renew in writing within one month of its expiry, and if the consumer exercises this option, the contract can continue past 24 months (s 24(3)). If a contract does exceed 24 months in duration, there are remedies available under s 24(6).


The court may draw the conclusion that a practice is deceptive on the basis of vague contractual language in circumstances where that language allowed the supplier to claim that additional work was not part of the original contract: see ''[https://www.canlii.org/en/bc/bcsc/doc/1999/1999canlii6663/1999canlii6663.html?autocompleteStr=British%20Columbia%20(Director%20of%20Trade%20Practices)%20v%20Van%20City%20Construction%20Ltd&autocompletePos=2 British  Columbia (Director of Trade Practices) v Van City Construction Ltd]'', [1999] BCJ No 2033 (SC) (QL).
=== 1. Right of Cancellation ===


=== 2. Unconscionable Acts ===
Because they are often sold at high-pressure presentations, these contracts are subject to a 10 day right of cancellation from the date the consumer receives a copy of the contract (s 25(6)). Section 26(3), which also gives a 10 day right of cancellation, applies to time-share interests not covered by the ''Real Estate Development Marketing Act'', SBC 2004, c 41, such as resorts or condominiums.  


Sections 7 to 9 of the ''BPCPA'' now set out clear prohibitions. Unconscionable acts involve high pressure tactics or demanding consideration far in excess of the market, and may occur before, during or after the consumer transaction. Under s 10(1), if an unconscionable act or practice occurred in respect of a consumer transaction, that consumer transaction is not binding on the consumer or guarantor. The court will look at the particular vulnerabilities of the consumer, such as mental infirmity, ignorance, illiteracy, age or inability to understand the  character, nature or language of the consumer transaction, which will trigger the reviewability of that transaction in the consumer’s mind. Both the common law and statutes hold the supplier to a stringent standard, demanding that they not act unreasonably in order to protect their own interests.  
Contracts for continuing services can also be cancelled if there is a material change in circumstances of the buyer or the seller, and where the buyer or seller gives notice of cancellation (s 25). When alleging a material change in circumstances as the basis for cancelling, the reason must be specified in the notice (s 25(2)).  


Under s 9(2), if it is alleged that a supplier committed or engaged in an unconscionable act or practice, the burden of proof is on the supplier to show that the unconscionable act or practice was not committed.  
Material changes in circumstances include, but are not limited to:
*the buyer’s death; and
*permanent disability or permanent relocation further than 30 km further from when the consumer entered into the contract.  


:'''NOTE:''' As above, s 8(3) sets out a list of circumstances that the court must consider when determining whether a practice is unconscionable. Again, this list is not comprehensive, as the court must consider all of the surrounding circumstances of which the supplier knew or ought to have known.
Material changes in circumstances of the seller include:  
*through the partial or entire fault of the seller, the services are not completed, or at any time the seller appears to be unable to reasonably complete the services in the time frame set out in the contract for the completion of services;
*the services are no longer available because of the seller’s discontinued operation or substantial change in operation; and
*the relocation of the business of the seller 30 km from the buyer without provision of equivalent service within 30 km.  


== C. Remedies and Sanctions ==
Section 54 sets out the required form and procedure for giving notice. (See [[{{PAGENAME}}#1. Right of Cancellation - Direct Sales | Section V.A.1]])


=== 1. Damages Recoverable by Consumers ===
== D. Unsolicited Goods or Services ==


Under s 171 of the ''BPCPA'', a consumer may commence a civil action seeking damages for loss due to a deceptive or unconscionable act or practice. As with other civil actions, punitive damages or restitution may also be available. Small Claims Court may be used if the claim does not exceed $35,000.  
Under s 11, unsolicited goods or services means goods or services that are supplied to a consumer who did not request them, other than:
*(a) goods or services supplied to a consumer who knew or ought to have known they were intended for delivery to another person;
*(b) goods or services for which the supplier does not require payment; or
*(c) a prescribed supply of goods or services.  


=== 2. Transaction Unenforceable by Supplier ===
Under s 12, a recipient of unsolicited goods has no legal obligation to the sender unless the recipient gives notice of an intention to accept them, or unless the recipient knew or ought to have known that the goods were intended for delivery to another person.


Under s 10(1), where there is an unconscionable act or practice in a consumer transaction, that transaction is unenforceable by the supplier.
If however, a consumer does pay for unsolicited goods or services, under s 14 the consumer may give to the supplier a demand, in writing, for a refund from the supplier within 2 years after the consumer first received the goods or services if the consumer did not expressly acknowledge to the supplier in writing their intention to accept the goods or services.  


=== 3. Injunction, Declaration and Class Action ===
:'''NOTE:''' If a consumer is being supplied with goods or services on a continuing basis and there is a material change in the goods or services or in the supply of them, the goods or services are deemed to be unsolicited goods or services from the time of the material change '''unless''' the supplier is able to establish that the consumer consented to the material change.


Under s 172, any person, whether or not that person has a special interest in or is affected by a consumer transaction, may bring an action seeking declaratory or injunctive relief. This involves seeking to have the court declare an act to be deceptive or unconscionable and to have the court grant an injunction restraining the supplier from engaging further in such acts. Under s 172(2) the Director may bring an action on behalf of consumers generally or a designated class of consumers.  
== E. Distance Sales ==


The ''BPCPA'' stipulates that while the Provincial Court has jurisdiction for civil actions under s 171, actions under s 172 must be brought in Supreme Court.  
Under section 17, a “distance sale” means “a contract for the supply of goods or services between a supplier and a consumer that is not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into”. This definition encompasses all forms of commerce where the parties are not face-to-face, such as catalogue sales, sales over the internet, or sales over the telephone. Section 48 stipulates that a supplier must give a consumer a copy of the contract within 15 days after the contract is entered into, and also sets out a list of requirements for distance sales contracts.  Section 46 sets out what information must be disclosed to the consumer prior to the consumer entering into the distance sales contract. For example, the supplier must disclose a detailed description of the goods, the currency, delivery arrangements and the cancellation policy, if any. This is not an exhaustive list; please see the Act.


For an example of a class action suit dealing with the ''BPCPA'', see ''[https://www.canlii.org/en/bc/bcca/doc/2006/2006bcca369/2006bcca369.html?autocompleteStr=Dahl%20v%20royal%20bank%20&autocompletePos=2 Dahl v Royal Bank of Canada]'', 2006 BCCA 369. Credit card debtors  brought a class action suit against the Royal Bank of Canada, the Canadian Imperial Bank of Commerce, and the Bank of Montreal. In the plaintiffs’ Statement of Claim, they asserted that the defendants failed to disclose the true cost of borrowing by providing the transaction dates for cash advances on their monthly statements rather than the posting dates (the dates the money was actually advanced), allowing more interest to be charged; the court, however, ultimately rejected this argument.  
Section 47 includes additional requirements for contracts that are in electronic form. Specifically, the supplier must make the information from s 46 available in a manner that the consumer can access, retain and print. The supplier must also give the consumer the opportunity to correct errors and accept or decline the contract.


In any action for permanent injunction under s 172(1)(b), the court may restore to any interested person any property or money acquired by  deception or unconscionable acts or practices by the supplier (s 172(3)(a)), and may require the supplier to advertise to the public in a way that will assure prompt and reasonable communication to consumers (s 172(3)(c)).
Section 49 provides consumer rights concerning cancellation of distance sales contracts. Note that there are different time restrictions on cancellation rights for distance sales depending on which provisions the supplier does not comply with. Once a consumer gives notice to the supplier of the cancellation, the supplier has 15 days to refund to the customer all monies paid in respect of the contract and any related consumer transactions (s 50). If the supplier fails to do this, the consumer may have recourse under s 52 if the consumer charged to a credit card all or any part of the total price under the contract, and the consumer may also be entitled to recover the refund as a debt due (s 55).


=== 4. Supplier Found Guilty of an Offence ===
== F. Credit Transactions ==


Under the ''BPCPA'' Section 189 creates a list of offences punishable by both fines and imprisonment, which may be sought by the Crown against a party found in breach of the BPCPA. Under s 190, an individual who commits an offence is liable to a fine of not more than $10,000, or to imprisonment for not more than 12 months, or to both.  
Part 5 of the ''BPCPA'' deals with the disclosure of the cost of consumer credit.


== D. Limitation Period ==
The Acts set out disclosure requirements, as well as advertising requirements for both fixed and open credit. The basic distinction between fixed and open credit is that open credit involves multiple advances and does not establish the total amount advanced under the agreement. However, open credit can be subject to an overall credit limit. Fixed credit is a credit arrangement that is normally based on a fixed initial advance and a predetermined payment schedule. Under s 105 of the ''BPCPA'', the creditor is obliged to compensate borrowers for contraventions of the Act.


Under s 193, no prosecution under the ''BPCPA'' may be started more than two years after the date on which the subject matter of the proceeding arose.  
The rules for credit transactions under the ''BPCPA'' are:
*Under s 66, lenders are required to furnish debtors with a written statement of disclosure. Consult ss 66-93 for the specific requirements pertaining to your client’s situation.
*Under ss 59 to 64, certain requirements flow from the advertising of certain aspects of credit, such as interest-free periods, interest rates, and cost of credit.
*Under Division 4 of Part 5, a borrower has certain rights, such as being able to choose an insurer and to cancel optional services.
*Under s 99, where a credit card is lost or stolen, the holder is not liable for any charges incurred after notice in person or by registered mail has been given to the issuer of the card. In the case of purchases made before notice is given, an individual is only liable for $50 or up to the credit limit remaining on the card, whichever is less. This protection does not extend to situations where a credit card is used with a personal identification number at an ATM (see ''Plater v Bank of Montreal'' (1988), 22 BCLR (2d) 308 (Co Ct)).  


Note that s 193 does not apply to civil proceedings. The limitations period in civil proceedings will depend on the nature of the claim and the time period allowed by the ''Limitation Act''; see [[Consumer Transaction Analysis (11:II)#E. Determine the Limitation Period for Making a Claim | Section II.E:  Determine the Limitation Period for Making a Claim]].
=== 1. Notice Required for Increased Interest Rates ===


== E. Powers of the Director ==
Under s 98, there is a notice requirement for increasing credit card interest rates.  


Consumer Protection BC [CPBC] is responsible for the administration and enforcement of the BPCPA and is also empowered by another piece of legislation: the Business Practices and Consumer Protection Authority Act, SBC 2004, c 3. Part 10 of the BPCPA contains all inspecting and enforcement powers of CPBC, its inspectors, and the Director. The Director has the power to:
=== 2. Unsolicited Credit Cards ===
*a) use the same powers that the Supreme Court has during trials of civil action for the purposes of an inspection, to summon and enforce the  attendance of witnesses, compel witnesses to give evidence under oath or in any other manner, and to produce records;
*b) institute proceedings or assume the conduct of proceedings on behalf of a consumer;
*c) make an order (called a “freeze” order) against assets of a person who is being investigated (s 159). This order can also be attached to  property being held in trust for a person under investigation. Thus, although CPBC is not empowered to actually seize money, it is able to freeze accounts, which can be a way to encourage supplies to transfer funds to consumers;
*d) refrain from bringing an action against a supplier and accept instead a written undertaking under s 154 of the ''BPCPA''. This undertaking usually takes the form of a formal agreement between the Director and supplier and may involve consumer redress. It is probably one of the most effective remedies under the ''BPCPA'' because it avoids both the time and expense of court proceedings;
*e) issue a compliance order under s 155 of the ''BPCPA'' where compliance is mandatory. The Director can order restitution and compensation  to the consumer with this function (s 155(4)) without having to go through court proceedings. If a person fails to comply with a compliance order, they are committing an offence under s 189(5) and could face a fine of not more than $10,000, imprisonment for not more than 12 months, or both;
*f) f) file an undertaking, compliance order, or a direct sales prohibition order with the Supreme Court. Doing so would mean that the undertaking or order is deemed to be a court order, and thus it will be enforceable as such (s 157). This can be useful in encouraging resolution amongst parties.
*g) seek declaration and/or injunctive relief on behalf of a consumer, or a class of consumers, and make their applications ''ex parte'' (s 172); and
*h) impose an administrative penalty under s 164.
While there are a number of actions that CPBC is empowered to take, including pursuing civil and quasi-criminal enforcement, it is much more likely that CPBC will be involved in handling complaints and in investigations. Complaints can be initiated on Consumer Protection BC’s website: https://www.consumerprotectionbc.ca/consumer-help/start-a-complaint/.


== F. Deceptive Practices Under the Competition Act ==
Section 96 provides that a credit card issuer must not issue a credit card to an individual that has not applied for one. This does not affect the ability of a credit card issuer to provide a renewal or replacement card that has been applied for.             


In addition to the protections under the ''BPCPA'', the ''Canadian Competition Act'', RSC 1985, c C-34, proscribes various types of deceptive practices. Some common ones are discussed below:
Sections 56.1-56.5 regulate the terms of prepaid purchase cards. A prepaid purchase card is a card, written certificate or other voucher with  a monetary value that is issued or sold to a person in exchange for the future supply of goods or services. These include gift cards or gift certificates. Section 56.2 prevents any cards from being issued with an expiry date. ''Prepaid Purchase Cards Regulation'', BC Reg 292/2008 contains exemptions from the expiry date prohibition. These include cards issued for a specific good or service, cards issued for a charitable purpose, and cards issued to a person who provides nothing of value in exchange.


=== 1. More than One Price Tag (“Double Ticketing”) ===
== G. High-Cost Loans (Payday Loans) ==


Shopkeepers often mark goods for sale with more than one price tag. Under the ''Competition Act'', RSC 1985, c C-34, it is an offence for the store to charge anything but the lowest price unless the lower price has been crossed out or the new tag covers the older tag (s 54). The older tag does not have to be unreadable; a line over it or a new tag slightly covering it is fine. However, a cashier may not cross out the older price at the cashier stand. Note that the consumer has no independent right of action. The Competition Bureau, on its website, indicates that “prosecutions under this section have rarely occurred”.  
=== 1. Criminal Code ===


=== 2. Advertising a Sale Price ===
Section 347 of the ''Criminal Code'' prohibits loans that charge a criminal rate of interest, which is defined as an annual rate that '''exceeds 60 percent'''.  


If a business advertises a sale price, it must charge that price throughout the sale period (''Competition Act'' s 74.05). However, the advertiser may be relieved of this obligation if (1) the price was advertised in error and if the advertisement indicated prices were subject to error, or (2) the advertisement is immediately followed by a correction. Advertisers who violate this section may be subject to an administrative penalty (s 74.1).  
Loans offered by payday lenders, if calculated according to the ''Criminal Code'', may charge rates that exceed the amount permitted under the definition. In 2006, the federal government amended the ''Criminal Code'' to exempt payday loan agreements from the criminal interest rate provision.  


=== 3. Bait and Switch ===
Under s 347.1, payday loan agreements are defined and are exempted from s 347 provided that the following three conditions are met:
If a business advertises a sale, it must stock a reasonable quantity of the item (''Competition Act'' s 74.04(2)). The bait and switch tactic occurs when a business advertises an item at a bargain price to attract customers but, having no intention of selling the item, does not adequately stock it. Rather, the business intends to use sale pressure to get customers to buy other, higher-priced items.
*i) the loan must be for $1500 or less and for 62 days or less;
*ii) the person must be licensed or specifically authorized under provincial/territorial law to enter into that payday loan agreement; and
*iii) the province must be designated by the Governor in Council (which will happen in the province has adequate measures to protect recipients of payday loans)


If the business does not have adequate stock of a sale item, it must issue rain cheques. Rain cheques are not required, however, if the advertisement states “while quantities last”.  
=== 2. Payday Loans ===


Advertisers who violate this section may be subject to an administrative penalty (s 74.1). A business may avoid penalties stemming from bait and switch tactics if it attempted to supply more of an item than it was able to, if demand for the item was greater than expected, or if the advertisement stated that the sale price was good “while supplies last”.
Section 2 of ''Payday Loans Regulation'', BC Reg 57/2009 designates payday lenders as a “designated activity” under s 142 of the ''BPCPA''. A payday lender "means a person who offers, arranges, provides or otherwise facilitates payday loans to or for consumers" and includes "a person who, for compensation, arranges, negotiates or facilitates an extension of credit". Section 143 requires anyone who participates in a designated activity to carry a license. A payday lender must carry a separate license for each operating location. They must have a sign at each location displaying this license number, the maximum charges permitted in BC (15% of principal), the amount they charge, the total cost of borrowing $300 for 14 days, and the annual percentage rate they charge.


== G. False or Misleading Advertising ==
The regulations also set limits on the amount of interest that can be applied, mirroring s 347 of the ''Criminal Code''.
*i) The maximum amount that can be charged on a payday loan is $15 for every $100 borrowed including all charges and fees.
*ii) In addition, a payday loan cannot exceed 50% of the borrower's net pay to be received during a single pay period within the payday loan term.
*iii) If the repayment amount is not paid, default fees cannot exceed 30% per annum on the outstanding principal.


All advertising, whether on radio or television, in a newspaper or flyer or posted in a store, is subject to federal and provincial laws that  prevent businesses from making false claims that may mislead consumers. The ''BPCPA''’s prohibition against deceptive acts and practices extends to advertising, as a representation made before a sale. (s 4(2)).  
Thus, payday loans in BC are permitted under ''Criminal Code'' section 347.1, as long as they follow the provincial requirements.


Purchasers have a right to know what they are buying. If a person asks for information and the sales agent volunteers it, the information '''must''' be correct and not deceptive. However, not everything a salesperson says is a term of the contract; some comments are mere puffery. Puffery is the sort of comment that is made to promote a product. Such comments are statements of opinion rather than misrepresentations of fact and are not treated as part of the contract.           
These requirements do set out a number of additional restrictions on payday lenders (s 112.08). Notably, a payday lender may '''not''':
*(a) sell insurance to or for the borrower, or require or request that the borrower insure a payday loan;


An example of puffery is “It’s a great little car.”             
*(b) issue a new payday loan to a borrower who already has a payday loan issued by the lender;


An example of a statement of fact is “It's a 1994 Dodge.”
*(c) require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging, providing or otherwise facilitating a payday loan;


What would otherwise be puffery may constitute a deceptive act or practice under the ''BPCPA''. In circumstances where a supplier provides a laudatory description of a defective item of which they have specific factual knowledge and of which the potential buyer is wholly unaware, the description is not mere puffery, but rather a deceptive act. See ''Rushak'', above.
*(d) require, request or accept any undated cheque;


For credit advertising, pay particular attention to ss 59 to 64 of the BPCPA. When there is misrepresentation, a consumer may also have a cause of action at common law.
*(e) require, request or accept any post-dated cheque, pre-authorized debit or future payment of a similar nature, for any amount exceeding the amount to repay the payday loan by the due date, including interest and permissible charges (although, a one-time fee of $20 is allowed for a dishonoured cheque or pre-authorized debit);


=== 1. The Common Law ===
*(f) require or request any payment from the borrower before it is due under the loan agreement;


Despite the breadth of the ''BPCPA'', it does not provide remedies for all contractual situations. Before commercial legislation (''SGA'') or consumer protection acts (''BPCPA''), the common law provided remedies for misrepresentation.
*(g) grant rollovers (i.e. charge a fee to extend a loan’s due date);


==== a) Fraudulent Misrepresentation ====
*(h) require, request or accept an assignment of wages from the borrower (and if they do the assignment of wages is not valid);


Fraudulent misrepresentation occurs when the vendor knowingly makes a false statement of fact that is material to the contract and the statement serves as an inducement to enter the contract. The buyer may be awarded the common law remedy of rescission and can also sue for damages in the tort of deceit. Breaches of contract  damages, such as the expectation of profit, are not available, because a party cannot claim for the contract to be rescinded and, at the same time claim that the contract exists for the purposes of claiming damages.
*(i) require, request or accept from the borrower or any other person, as security for a payday loan, any personal property, real property, or documentation that could be used to transfer title in personal property or real property;


==== b) Innocent Misrepresentation ====
*(j) discount the principal amount of a payday loan by deducting or withholding from the initial advance an amount representing any portion of the total cost of credit;


An innocent misrepresentation arises when a representation of fact is false, material to the contract, and the buyer is induced to enter the contract by the representation. Unlike fraudulent misrepresentation, though the representation is not known to be false. The remedy, which is an equitable remedy, is rescission, which attempts to put the parties back in the position they were in before the contract.  
Additionally, there is a mandatory period set out in the regulations where a consumer is allowed to return the money and cancel the payday loan. This period begins on the date that the borrower receives the first advance and expires at the end of the second day that the payday lender is open for business after that first advance.


A misrepresentation might also be considered to be a term of the contract or as a term in a collateral contract. In this situation, the client can sue for damages if the misrepresentation ends up being untrue.  
=== 3. High-Cost Credit Products ===
Legislation designed to protect consumers from lenders who offer loans with high interest rates, but are not payday lenders, received royal assent in May 2019, but requires regulations to be passed before coming into force.


For the remedy of rescission, there could be several possible bars:
High cost credit products are loans or lines of credit that charge high interest rates and/or various fees. The formal definition of a High-Cost Credit Products is:
*i) third party rights have arisen;
*ii) an undue delay occurred since the misrepresentation;
*iii) the contract has been executed (not an absolute bar);
*iv) the contract has been affirmed by the aggrieved party; or  
*v) it is impossible for the courts to undo the contract.


==== c) Negligent Misrepresentation ====
*(a) a fixed credit product that has an APR (annual percentage rate) that exceeds the prescribed APR and meets other prescribed criteria,


Negligent misrepresentation operates in the same way as innocent misrepresentation, but it arises when the representation is made negligently as opposed to in a completely innocent manner. As with innocent misrepresentation, the remedy is rescission. ''Hedley Bryne & Co Ltd v Heller and Partners Ltd'', [1961] 3 All ER 891 (HL) is one example of a case involving negligent misrepresentation.
*(b) an open credit product that has an annual interest rate that, calculated in accordance with the regulations, exceeds the prescribed annual interest rate and meets other prescribed criteria,


*(c) a lease that has an APR that exceeds the prescribed APR and meets other prescribed criteria, or


*(d) a prescribed product through which credit is extended by a high-cost credit grantor to a borrower primarily for a personal, family or household purpose,
but does not include a payday loan, mortgage on real property or prescribed credit product;
Once the regulations are passed, a new part (Part 6.3) will be added to the ''Business Practices and Consumer Protection Act'' that creates restrictions on high-cost credit products. The new regime limits a credit grantor to a prescribed rate (or the criminal rate if none is prescribed), requires certain terms to be in high-cost credit agreements, and requires that the credit grantor not charge, require, or accept any amount not allowed (such as a fee for making a payment before it is due), not disclosed, or that exceeds the high-cost credit agreement.
== H. Remedies and Sanctions ==
In addition to the remedies already mentioned that are available to consumers, the ''BPCPA'' provides for further sanctions:
=== 1. Fines or Imprisonment ===
Section 190 establishes a summary conviction offence with penalties of imprisonment up to one year and fines of up to $10,000 for individuals and $100,000 for corporations, for any contravention of the ''BPCPA''.
=== 2. Investigation and Search Powers ===
Part 10 gives the Director the power to investigate and request information where there are reasonable and probable grounds to believe that a person has contravened, is contravening, or is about to contravene the ''BPCPA'' or an order made under it.




{{LSLAP Manual Navbox|type=chapters8-14}}
{{LSLAP Manual Navbox|type=chapters8-14}}

Revision as of 22:31, 28 September 2020

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on August 15, 2019.
LSLAP Manual
LSLAP Manual
This page is from the
Law Students' Legal
Advice Program Manual.
See the full contents.
LSLAP Manual
Introduction
Chapters
11. Consumer Protection
 · I. Introduction

 · II. Governing Legislation and Resources
 · III. Contracts for Sale of Goods
 · IV. Consumer Protection
 · V. Direct Sales
 · VI. Conditional Sales Contracts
 · VII. Motor Dealer Act
 · VIII. Miscellaneous
 · IX. Forum of Redress

 · X. Consumer Transactions
v • d • e



Since the BPCPA has replaced the Consumer Protection Act, the BPCPA covers door-to-door sales, payday loans, credit cards, income tax refund services (although the federal Tax Rebating Discounting Act, RSC 1985, c T-3 regulates the actual amount which can be refunded), food plan contracts, unsolicited goods, and similar activities. The primary remedy for consumers in the BPCPA regarding these types of activities is the right to avoid or cease contracts for direct sale or for future services, after giving notice in the manner required by the statute. A single contract may fall under more than one category, and in that case, will attract the requirements and cancellation provisions of each applicable section.

NOTE: When exercising cancellation rights under the BPCPA consumers should be apprised of ss 27 and 28. In most cases, the contract is effectively rescinded by the cancellation; goods must be returned undamaged and payment must be refunded in full. Furthermore, if a supplier will not provide a refund as required under Division 2 of the BPCPA, section 55 of stipulates that a consumer may be entitled to recover the refund as a debt due.

A. Direct Sales

When consumer is approached by a salesperson, instead of making a conscious decision to seek out a product or service, they may be taken unawares and can be vulnerable to being taken advantage of. The BPCPA recognizes this risk by imposing disclosure requirements and allowing a consumer to cancel the contract in ways the common law of contract does not permit.

A direct sales contract is defined in s 17 as:

...a contract between a supplier and a consumer for the supply of goods or services that is entered into in person at a place other than the supplier's permanent place of business, but does not include any of the following:

  • (a) a funeral contract, interment right contract or preneed cemetery or funeral services contract;
  • (b) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than an amount of $50 (Consumer Contracts Regulation BC Reg 272/2004 s 4 [CCR]);
  • (c) a prepaid purchase card;

The BPCPA sets out a lengthy list of requirements under ss 19 and 20 for the content of direct sales contracts, such as the name, address, and telephone number of the seller, the name (in a readable form) of the individual who signs the contract on behalf of the supplier, a detailed description of the goods or services to identify them with certainty, the price, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is not an exhaustive list; please consult the BPCPA and regulations.

Under s 5 of the CCR, there are several exemptions to the applicability of the BPCPA to direct sales contract. Such exemptions include certain classes of direct sellers who are selling goods or services for which they are licensed, registered, or incorporated (s 5(4)), and direct sales contracts that are entered into in certain places, such as agricultural shows or fairs, trade shows, and craft fairs. Direct sellers are also exempt if the seller attends the place following a request that was made at least 24 hours in advance by the consumer or a friend or relative of the consumer who is not an associate of the direct seller. For a full list of exemptions, please consult the CCR.

1. Right of Cancellation - Direct Sales

Under s 21 of the BPCPA,

  • (a) the purchaser may cancel the contract within 10 days after receiving a copy of the contract. The purchaser need not offer explanations for their decision. The vendor then has 15 days after the date of cancellation to refund all money without deduction.
  • (b) if a delivery date is specified in the contract and not all of the goods/services are delivered/performed within 30 days of this date, the purchaser may cancel the contract within one year after the date a copy of the contract was received, provided that the purchaser has not accepted or used the goods/services;
  • (c) if the contract does not contain information required under s 19 and 20(1) of the Act, the buyer may cancel within one year of the date of the contract.

A direct sale is unenforceable by the seller if the buyer is required to make a down payment in excess of a prescribed amount (BPCPA, s 20(3)(b)). Section 4(2) of the CCR sets the amount of down payment prescribed under s20(3)(b) as either $100 or 10% of the total price.

NOTE: Whether the purchaser has accepted goods is determined by the definition in the Sale of Goods Act (s 39).

The BPCPA does not make oral executory contracts unenforceable. However, s 20(3) requires that the seller give a written copy of the contract to the buyer at the time of signing. Otherwise the contract is not binding on the buyer.

Section 54 requires that the buyer provide notice of cancellation to the seller, and declares that it may be delivered by any method that permits the cancelling party to produce evidence that the contract was cancelled. Notice by registered mail, electronic mail, personal delivery, and fax is explicitly permitted. Nowhere does the BPCPA explicitly state that a notice of cancellation shall be in writing, but a buyer should be cautious and deliver written notice. The section explicitly permits that the notice can be given to the seller directly, or to the postal, fax, or electronic mail address of the seller shown in the contract. When a buyer rescinds a contract under s 21, that section also provides that the goods may be retained until all of the money paid is refunded.

In Woodward v International Exteriors (British Columbia) Ltd, (1991), 53 BCLR (2d) 397, 1 BLR 254 (CA) at para 10, verbal notice of termination of an agreement was sufficient for the consumer to terminate this form of contract. Note that verbal notice may not be sufficient in all instances and written notice remains advisable.

B. Future Performance Contracts

A future performance contract is defined in s 17 as:

...a contract between a supplier and a consumer for the supply of goods or services for which the supply or payment in full of the total price payable is not made at the time the contract is made or partly executed, but does not include:

  • (a) a contract for which the total price payable by the consumer, not including the total cost of credit, is less than a prescribed amount of $50 (CCR' s 6);
  • (b) a contract for the supply of goods or services under a credit agreement, as defined in s 57 (definitions), if the goods or services have been supplied;
  • (c) a time share contract; or
  • (d) a prepaid purchase card.


Future services contracts are subject to some important statutory requirements under Part 4, Division 2 of the BPCPA.

The BPCPA sets out a long list of requirements under ss 19 and 23 for the content of future services contracts, such as the name, address, and telephone number of the seller, a detailed description of the goods or services to identify them with certainty, the price, supply date, and a detailed statement of the terms of payment. When credit is extended, there also needs to be a description of the subject matter of any security interest. This is not an exhaustive list; please consult the Act.

Under s 23(4), a future performance contract is not enforceable by the seller if a rebate or discount is given on the condition of some event occurring after the time the buyer agrees to buy (usually a referral selling scheme whereby the purchaser aids the seller in making a further sale).

If the future performance contract does not contain the required information (ss 19 and 23), then a consumer may cancel the contract by giving notice of cancellation to the supplier within one year of the date that the consumer receives a copy of the contract (s 23(5)). Section 54 sets out the required form and procedure for giving notice. (See Section V.A.1).

C. Continuing Services Contracts: Gym Memberships, Travel or Vacation Clubs

These contracts are called continuing services contracts because, while you may pay now, the contract extends into the future. This type of contract is often used when one joins a karate club or a dance studio, or buys a membership in a vacation club.

Continuing services contracts must not exceed 24 months in duration. However, a contract can allow the consumer to renew in writing within one month of its expiry, and if the consumer exercises this option, the contract can continue past 24 months (s 24(3)). If a contract does exceed 24 months in duration, there are remedies available under s 24(6).

1. Right of Cancellation

Because they are often sold at high-pressure presentations, these contracts are subject to a 10 day right of cancellation from the date the consumer receives a copy of the contract (s 25(6)). Section 26(3), which also gives a 10 day right of cancellation, applies to time-share interests not covered by the Real Estate Development Marketing Act, SBC 2004, c 41, such as resorts or condominiums.

Contracts for continuing services can also be cancelled if there is a material change in circumstances of the buyer or the seller, and where the buyer or seller gives notice of cancellation (s 25). When alleging a material change in circumstances as the basis for cancelling, the reason must be specified in the notice (s 25(2)).

Material changes in circumstances include, but are not limited to:

  • the buyer’s death; and
  • permanent disability or permanent relocation further than 30 km further from when the consumer entered into the contract.

Material changes in circumstances of the seller include:

  • through the partial or entire fault of the seller, the services are not completed, or at any time the seller appears to be unable to reasonably complete the services in the time frame set out in the contract for the completion of services;
  • the services are no longer available because of the seller’s discontinued operation or substantial change in operation; and
  • the relocation of the business of the seller 30 km from the buyer without provision of equivalent service within 30 km.

Section 54 sets out the required form and procedure for giving notice. (See Section V.A.1)

D. Unsolicited Goods or Services

Under s 11, unsolicited goods or services means goods or services that are supplied to a consumer who did not request them, other than:

  • (a) goods or services supplied to a consumer who knew or ought to have known they were intended for delivery to another person;
  • (b) goods or services for which the supplier does not require payment; or
  • (c) a prescribed supply of goods or services.

Under s 12, a recipient of unsolicited goods has no legal obligation to the sender unless the recipient gives notice of an intention to accept them, or unless the recipient knew or ought to have known that the goods were intended for delivery to another person.

If however, a consumer does pay for unsolicited goods or services, under s 14 the consumer may give to the supplier a demand, in writing, for a refund from the supplier within 2 years after the consumer first received the goods or services if the consumer did not expressly acknowledge to the supplier in writing their intention to accept the goods or services.

NOTE: If a consumer is being supplied with goods or services on a continuing basis and there is a material change in the goods or services or in the supply of them, the goods or services are deemed to be unsolicited goods or services from the time of the material change unless the supplier is able to establish that the consumer consented to the material change.

E. Distance Sales

Under section 17, a “distance sale” means “a contract for the supply of goods or services between a supplier and a consumer that is not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into”. This definition encompasses all forms of commerce where the parties are not face-to-face, such as catalogue sales, sales over the internet, or sales over the telephone. Section 48 stipulates that a supplier must give a consumer a copy of the contract within 15 days after the contract is entered into, and also sets out a list of requirements for distance sales contracts. Section 46 sets out what information must be disclosed to the consumer prior to the consumer entering into the distance sales contract. For example, the supplier must disclose a detailed description of the goods, the currency, delivery arrangements and the cancellation policy, if any. This is not an exhaustive list; please see the Act.

Section 47 includes additional requirements for contracts that are in electronic form. Specifically, the supplier must make the information from s 46 available in a manner that the consumer can access, retain and print. The supplier must also give the consumer the opportunity to correct errors and accept or decline the contract.

Section 49 provides consumer rights concerning cancellation of distance sales contracts. Note that there are different time restrictions on cancellation rights for distance sales depending on which provisions the supplier does not comply with. Once a consumer gives notice to the supplier of the cancellation, the supplier has 15 days to refund to the customer all monies paid in respect of the contract and any related consumer transactions (s 50). If the supplier fails to do this, the consumer may have recourse under s 52 if the consumer charged to a credit card all or any part of the total price under the contract, and the consumer may also be entitled to recover the refund as a debt due (s 55).

F. Credit Transactions

Part 5 of the BPCPA deals with the disclosure of the cost of consumer credit.

The Acts set out disclosure requirements, as well as advertising requirements for both fixed and open credit. The basic distinction between fixed and open credit is that open credit involves multiple advances and does not establish the total amount advanced under the agreement. However, open credit can be subject to an overall credit limit. Fixed credit is a credit arrangement that is normally based on a fixed initial advance and a predetermined payment schedule. Under s 105 of the BPCPA, the creditor is obliged to compensate borrowers for contraventions of the Act.

The rules for credit transactions under the BPCPA are:

  • Under s 66, lenders are required to furnish debtors with a written statement of disclosure. Consult ss 66-93 for the specific requirements pertaining to your client’s situation.
  • Under ss 59 to 64, certain requirements flow from the advertising of certain aspects of credit, such as interest-free periods, interest rates, and cost of credit.
  • Under Division 4 of Part 5, a borrower has certain rights, such as being able to choose an insurer and to cancel optional services.
  • Under s 99, where a credit card is lost or stolen, the holder is not liable for any charges incurred after notice in person or by registered mail has been given to the issuer of the card. In the case of purchases made before notice is given, an individual is only liable for $50 or up to the credit limit remaining on the card, whichever is less. This protection does not extend to situations where a credit card is used with a personal identification number at an ATM (see Plater v Bank of Montreal (1988), 22 BCLR (2d) 308 (Co Ct)).

1. Notice Required for Increased Interest Rates

Under s 98, there is a notice requirement for increasing credit card interest rates.

2. Unsolicited Credit Cards

Section 96 provides that a credit card issuer must not issue a credit card to an individual that has not applied for one. This does not affect the ability of a credit card issuer to provide a renewal or replacement card that has been applied for.

Sections 56.1-56.5 regulate the terms of prepaid purchase cards. A prepaid purchase card is a card, written certificate or other voucher with a monetary value that is issued or sold to a person in exchange for the future supply of goods or services. These include gift cards or gift certificates. Section 56.2 prevents any cards from being issued with an expiry date. Prepaid Purchase Cards Regulation, BC Reg 292/2008 contains exemptions from the expiry date prohibition. These include cards issued for a specific good or service, cards issued for a charitable purpose, and cards issued to a person who provides nothing of value in exchange.

G. High-Cost Loans (Payday Loans)

1. Criminal Code

Section 347 of the Criminal Code prohibits loans that charge a criminal rate of interest, which is defined as an annual rate that exceeds 60 percent.

Loans offered by payday lenders, if calculated according to the Criminal Code, may charge rates that exceed the amount permitted under the definition. In 2006, the federal government amended the Criminal Code to exempt payday loan agreements from the criminal interest rate provision.

Under s 347.1, payday loan agreements are defined and are exempted from s 347 provided that the following three conditions are met:

  • i) the loan must be for $1500 or less and for 62 days or less;
  • ii) the person must be licensed or specifically authorized under provincial/territorial law to enter into that payday loan agreement; and
  • iii) the province must be designated by the Governor in Council (which will happen in the province has adequate measures to protect recipients of payday loans)

2. Payday Loans

Section 2 of Payday Loans Regulation, BC Reg 57/2009 designates payday lenders as a “designated activity” under s 142 of the BPCPA. A payday lender "means a person who offers, arranges, provides or otherwise facilitates payday loans to or for consumers" and includes "a person who, for compensation, arranges, negotiates or facilitates an extension of credit". Section 143 requires anyone who participates in a designated activity to carry a license. A payday lender must carry a separate license for each operating location. They must have a sign at each location displaying this license number, the maximum charges permitted in BC (15% of principal), the amount they charge, the total cost of borrowing $300 for 14 days, and the annual percentage rate they charge.

The regulations also set limits on the amount of interest that can be applied, mirroring s 347 of the Criminal Code.

  • i) The maximum amount that can be charged on a payday loan is $15 for every $100 borrowed including all charges and fees.
  • ii) In addition, a payday loan cannot exceed 50% of the borrower's net pay to be received during a single pay period within the payday loan term.
  • iii) If the repayment amount is not paid, default fees cannot exceed 30% per annum on the outstanding principal.

Thus, payday loans in BC are permitted under Criminal Code section 347.1, as long as they follow the provincial requirements.

These requirements do set out a number of additional restrictions on payday lenders (s 112.08). Notably, a payday lender may not:

  • (a) sell insurance to or for the borrower, or require or request that the borrower insure a payday loan;
  • (b) issue a new payday loan to a borrower who already has a payday loan issued by the lender;
  • (c) require, request or accept consent from a borrower to use or disclose the borrower's personal information for a purpose other than offering, arranging, providing or otherwise facilitating a payday loan;
  • (d) require, request or accept any undated cheque;
  • (e) require, request or accept any post-dated cheque, pre-authorized debit or future payment of a similar nature, for any amount exceeding the amount to repay the payday loan by the due date, including interest and permissible charges (although, a one-time fee of $20 is allowed for a dishonoured cheque or pre-authorized debit);
  • (f) require or request any payment from the borrower before it is due under the loan agreement;
  • (g) grant rollovers (i.e. charge a fee to extend a loan’s due date);
  • (h) require, request or accept an assignment of wages from the borrower (and if they do the assignment of wages is not valid);
  • (i) require, request or accept from the borrower or any other person, as security for a payday loan, any personal property, real property, or documentation that could be used to transfer title in personal property or real property;
  • (j) discount the principal amount of a payday loan by deducting or withholding from the initial advance an amount representing any portion of the total cost of credit;

Additionally, there is a mandatory period set out in the regulations where a consumer is allowed to return the money and cancel the payday loan. This period begins on the date that the borrower receives the first advance and expires at the end of the second day that the payday lender is open for business after that first advance.

3. High-Cost Credit Products

Legislation designed to protect consumers from lenders who offer loans with high interest rates, but are not payday lenders, received royal assent in May 2019, but requires regulations to be passed before coming into force.

High cost credit products are loans or lines of credit that charge high interest rates and/or various fees. The formal definition of a High-Cost Credit Products is:

  • (a) a fixed credit product that has an APR (annual percentage rate) that exceeds the prescribed APR and meets other prescribed criteria,
  • (b) an open credit product that has an annual interest rate that, calculated in accordance with the regulations, exceeds the prescribed annual interest rate and meets other prescribed criteria,
  • (c) a lease that has an APR that exceeds the prescribed APR and meets other prescribed criteria, or
  • (d) a prescribed product through which credit is extended by a high-cost credit grantor to a borrower primarily for a personal, family or household purpose,

but does not include a payday loan, mortgage on real property or prescribed credit product;

Once the regulations are passed, a new part (Part 6.3) will be added to the Business Practices and Consumer Protection Act that creates restrictions on high-cost credit products. The new regime limits a credit grantor to a prescribed rate (or the criminal rate if none is prescribed), requires certain terms to be in high-cost credit agreements, and requires that the credit grantor not charge, require, or accept any amount not allowed (such as a fee for making a payment before it is due), not disclosed, or that exceeds the high-cost credit agreement.

H. Remedies and Sanctions

In addition to the remedies already mentioned that are available to consumers, the BPCPA provides for further sanctions:

1. Fines or Imprisonment

Section 190 establishes a summary conviction offence with penalties of imprisonment up to one year and fines of up to $10,000 for individuals and $100,000 for corporations, for any contravention of the BPCPA.

2. Investigation and Search Powers

Part 10 gives the Director the power to investigate and request information where there are reasonable and probable grounds to believe that a person has contravened, is contravening, or is about to contravene the BPCPA or an order made under it.


v • d • e
 
Chapters 8-14
Employment Insurance  · Employment Law  · Creditors and Debtors  · Consumer Protection  · Auto Insurance (ICBC)  · Motor Vehicle Law  · Mental Health Law
Chapter Eight:
Employment Insurance
Chapter Nine:
Employment Law
Chapter Ten:
Creditors' Remedies and Debtors' Assistance
Chapter Eleven:
Consumer Protection
Chapter Twelve:
Auto Insurance (ICBC)
Chapter Thirteen:
Motor Vehicle Law
Chapter Fourteen:
Mental Health Law
© Copyright 2023, The Greater Vancouver Law Students' Legal Advice Society.


Retrieved from "https://stagewiki.clicklaw.bc.ca/index.php?title=Consumer_Protection_from_Deceptive_and_Unconscionable_Acts_(11:IV)&oldid=47863"