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The Consumers Council of Canada

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The Council works to improve consumers’ ability to navigate marketplaces affecting everyday life.

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What are Legal Interest Rates on Loans?

Lower limits in Quebec, higher limits for payday loans and questions about enforcement.

There is a limit on the rate of interest that lenders can charge borrowers in Canada. With two notable exceptions, interest rates above 60% annually are not legal.

The Federal Criminal Code, specifically Section 347, establishes a “criminal limit” of 60% interest, and defines the components on which that limit should be calculated.

The first notable exception is in Quebec. Judgments of the Court of Quebec have established that rates above 35% violate Section 8 of its Consumer Protection Act.

The second notable exception is for payday loans. Those products charge significantly higher rates of interest for short borrowing periods, typically less than a month.

When those products grew in popularity, both provincial and federal governments worked to create an exception to the Section 247 provision. Loans that met certain criteria (under $1,500, less than 60 days to repay) would not violate the Criminal Code, provided provinces had passed legislation to limit and enforce those loans.

To date, eight provinces have passed payday loan legislation. Quebec has not, relying on its 35% limit, while Newfoundland and Labrador has announced plans to legislate, but that process is incomplete.

The issue of criminal lending limits is discussed in detail in a 2018 Consumers Council of Canada report Consumer Experiences with Higher Cost Credit.

That report notes another complication with enforcement. If a lender charges a rate of interest above the legal limits, how are consumers protected? Most provincial consumer protection offices indicate they have no ability to enforce in that area. The only potential for pro-active enforcement comes from the federal legislation.

Those looking for criminal enforcement are likely to be disappointed. In response to a query from researchers, the Federal Department of Justice indicated that the criminal interest rate legislation was introduced into Canadian law as a means to target loan sharking and was “not intended to act as a consumer protection tool.” The Criminal Code provision has led to “consumer protection” in instances when class action lawyers have mounted cases against lenders – these cases triggered the development of payday loan legislation – but not in instances when loans with rates higher than 60 per cent are offered in plain sight but without immediate evidence of the kind of threats sometimes associated with loan sharks to enforce repayment.

Credit, Financial Services, Payday Loans, Focus-Indebtedness, Right-Basic Needs, Right-Information, Right-Choice, Research

The Changing Face of Goverment Consumer Protection and Enforcement

Reductions in Inspections and Enforcement, More Reliance on Complaints

The trend of Canadian regulators to reduce or even withdraw from proactive inspections and enquiries leaves them more reliant on consumer complaints to observe and regulate marketplace behaviour.

A Consumers Council of Canada report released earlier this year examined consumer attitudes and policy developments in government handling of complaints. One of the report’s key segments described showed how apparent reduction of Competition Bureau monitoring at inspections in consumer packaging, textile labelling and precious metals marketing make it difficult for consumers to know if a consumer product is short weight, made of potentially allergenic fills or fibres of if an 18K gold wedding band is actually gold-plated brass.

The report also notes evidence of a reduction of inspections and inspection staff in areas such as food safety, commercial vehicle safety and aircraft safety.

The movement to more “risk-based” or responsive enforcement programs where actions are determined by complaint data and trend analysis runs contrary to OECD that “complaints should never be taken as the primary driver for targeting inspections,” the report notes. It also examines the folly of regulation that is not accompanied by some level of enforcement.

The report gathered consumer views directly through an online survey of 2,000 consumers. It also explored some international innovations such as U.K. “Super Complaints” legislation that has shown some promising results for consumers there, and the U.S Consumer Financial Protection Bureau’s interactive public complaints database.

Canada's Competition Bureau has responsibility for the Consumer Packaging and Labelling Act, Textile Labelling Act and Precious Metals Marking Act. However, its enforcement action can depend on complaints about possible offences by consumers and business competitiors.

Consumers who suspect they are victims of fraud in the purchase of goods can also consult the Canadian Anti-Fraud Centre.

Consumers should be careful of their contact with both agencies and to establish clear preferences for how return-contact concerning complaints should be initiated with them by these agencies. Sharing a secret word to help authenticate subsequent communications may help. Both agencies have been plagued recently by telephone scammers who present to call recipients as calling from these agencies, and their sender e-mail addresses could be spoofed.

Clothing, Public Safety, Weights and Measures, Right-Product Safety, Right-Information, Right-Redress, Right-Education, Research

Disconnect in Provincial Cell Phone Protection Approaches

B.C. releases pro-protection survey results just weeks after Ontario's regulations are repealed

British Columbia continues to work towards developing consumer protections around cellphone contracts, releasing a consumer survey that describes numerous problems just weeks after Ontario’s legislation was repealed.

Earlier this year, British Columbia announced it was responding to consumer dissatisfaction with cellphone billings and contracts and planned to strengthen consumer protection. On November 19, it released the next phase of that legislative development, the summary of a survey of 15,549 consumers.

Just six weeks earlier, Ontario’s Wireless Services Agreement Act was repealed and the two regulations made under it were revoked. Ontario’s legislation was implemented under the Liberal government in 2014, but repealed under the Progressive Conservative government in 2018, going out of effect in October 2019. At the time of the announcement, Ontario representatives said the provincial act had been superseded by federal regulations which provide nearly identical protections.

Based on the survey results, B.C. consumers found those protections lacking. While noting the existence of the federal Wireless Code and Commission for Complaints for Telecom-television Services (CCTS) complaints, the summary report included six key findings. Among them:
• Only 22% of respondents found their contract was easy to understand and only 36% found their bill easy to understand.
• Nearly three-quarters (71%) of respondents have had an issue with a contract or bill. Almost all (96%) of complaints were initiated with their provider, and only 22% of those customers were satisfied by the result.
• Only 6% of respondents agreed the cost of their cellphone service is reasonable
• Only 12% were aware of CCTS and just 8% were aware of the Wireless Code

The Wireless Code was established by the Canadian Radio-television and Telecommunications Commission (CRTC) in 2013, and updated in 2017. It provides consumers with rights such as plain language contracts, 15-day trial periods, maximum two-year contracts and caps on overage and roaming charges.

Created by the CRTC in 2007, the Commission for Complaints for Telecom-Television Services (CCTS) is responsible for resolving complaints from Canadian consumers and small business retail customers regarding wireless services.

General provincial consumer protection laws may offer consumers some additional protections. Most provinces track and report consumer complaints, and share this information with the public, each other and the federal ministry to which the CRTC reports, Innovation Science and Economic Development Canada. The Canadian Consumer Handbook provides links to provincial consumer ministries.

Information Technology, Telecom-Telephone, Telecom-Wireless, Focus-Digital Economy, Right-Information, Right-Choice, Right-Redress, Right-Education, Trendy, Research

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WORKING TOWARDS
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FOR CONSUMERS IN CANADA

OUR AIM IS AN EFFICIENT, EQUITABLE, SAFE AND EFFECTIVE MARKETPLACE

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Have a consumer
experience to share?

Help for
Consumers

Our Work
to Represent
Consumers

Consumer
Research
& Reports

Consumer
Protection
Initiatives

Get
Involved

Consumers find identifying perils of counterfeit goods difficult

Consumers eager for innovative ways to resolve marketplace problems

Canada lags behind at requiring standardized unit pricing displays at retail

Consumers nervous to get useful advice about energy performance of their homes

Extended product protections often misunderstood by consumers

Canadians enjoy little protection against prices, practices of instalment lenders

Featured Events

Latest News

What are Legal Interest Rates on Loans?

The Changing Face of Goverment Consumer Protection and Enforcement

Disconnect in Provincial Cell Phone Protection Approaches

PRIVACY POLICY | SITE MAP | SEARCH

© 2016 Consumers Council of Canada

WORKING TOWARDS AN IMPROVED MARKETPLACE FOR CONSUMERS IN CANADA

OUR AIM IS AN EFFICIENT, EQUITABLE, SAFE AND EFFECTIVE MARKETPLACE

Join the Consumers Council Public Interest Network

The Consumers Council of Canada

Have a consumer experience to share?

Consumers find identifying perils of counterfeit goods difficult

Consumers eager for innovative ways to resolve marketplace problems

Canada lags behind at requiring standardized unit pricing displays at retail

Consumers nervous to get useful advice about energy performance of their homes

Extended product protections often misunderstood by consumers

Canadians enjoy little protection against prices, practices of instalment lenders

Featured Events

Latest News

PRIVACY POLICY | SITE MAP | SEARCH

© 2016 Consumers Council of Canada

WORKING TOWARDS
AN IMPROVED MARKETPLACE
FOR CONSUMERS IN CANADA

Have a consumer
experience to share?