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.
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.
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.
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.
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.
Canadian consumer complaints about their telecommunications services continue to rise, according to the annual report of the industry’s dispute resolution service.
The Commission for Complaints for Telecom-Television Services (CCTS) reported a 35% increase in consumer complaints over the 12 months ending July 31, 2019 compared to the previous year. CCTS was created in 2007 by the CRTC to resolve complaints from Canadian consumers.
Wireless services are the largest component of the more than 19,000 complaints received. Billing-related issues (45%) and contract disputes (43%) are the most common issue of the cases that reached the CCTS. Internet complaints are the next most common, with billing again the most common type of complaint. The CCTS also deals with television and telephone (both long-distance and local) complaints.
The CCTS said it was able to “successfully resolve” 91% of complaints. The report defines this as including the satisfaction of both the customer and the participating service provider.
Results from a survey of British Columbia cellphone customers released earlier this month provide a much different view of consumer satisfaction in disputes. The B.C. results show that consumers who launched a dispute were generally unsatisfied with the resolution. Though consumers who filed a complaint through CCTS had the highest satisfaction rates in the survey, just 36% were satisfied. Moreover, only 3% of complaints reached the CCTS. More frequently, customers contacted the provider or went through an arbitration process but those avenues provided lower satisfaction rates (22% and 11% respectively). Just 12% of consumers in the BC survey were familiar with the CCTS complaint process.
Television complaint issues showed the highest rate of growth in the CCTS report, but August 2018 to July 2019 was the first full year of dealing with television complaints.
The report also noted CCTS involvement in the CRTC discussions that led to the establishment of the new Internet Code that CCTS will begin to administer in January 2020. It also contributed to CRTC hearings on sales practices of large telecom service providers, which led to a report on misleading and aggressive sales practices.
Figures for 2019-20 will also reflect another significant market change. Ontario’s Wireless Services Agreement Act was repealed, effective October 2019. At the time of that announcement in 2018, Ontario representatives said the provincial act had been superseded by federal regulations which provided nearly identical protections, and directed consumers to the CCTS services.
CCTS is funded by all participating telecom and TV service providers as required by Canada’s telecommunications and broadcasting regulator, the Canadian Radio-television and Telecommunications Commission (CRTC). Complaints that are accepted by CCTS are forwarded to the service provider with a 30-day response expected. Many complaints are resolved informally when the provider responds, but CCTS will launch investigations and sometimes mediate the disputes. They may recommend service providers make a payment to the customer to compensate for any loss, damage or inconvenience suffered by the customer, up to a maximum of $5,000.
Two of the four 'independent' directors and total of seven directors of CCTS are nominated by consumer groups. Three of the seven directors are industry representatives.
Chairs for six Consumers Council of Canada committees were selected at the Council’s Board of Directors meeting November 20.
Council President Don Mercer, re-elected to that post in July, will chair the Council’s Nominations committee. Other committee chairs named:
The Membership Committee chair is Dorothy Buchanan, a professional development coordinator for Students, Recruitment and Retention at Brock University.
The Energy Committee chair is Trevor Shaw, a professional auditor and accountant who holds CPA, CA, CMC and CQA designations and was a Director and then Principal with the Office of the Auditor General of Canada. He is also treasurer of the Consumers Council.
The Housing Committee chair is Marshall Leslie, whose consulting firm has provided a variety of services – including market research, forecasts and analysis – in the construction industry for more than 30 years.
The Internet and Telecommunications chair is Evan Leibovitch, who is Director of Community Relations for Linux Professional Institute and former President of the Canadian chapter of the Internet Society.
The Consumer Representation in Standards Committee chair is Jay Jackson, who is also the Council’s Director of Research and Development. He has more than 35 years experience as a federal government policy analyst dedicated to promoting consumer interests.