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.
TVOntario’s flagship public affairs program The Agenda Tuesday (8 pm EST) will examine how the rise of online shopping has also led to greater sales and distribution of counterfeit products – a topic also the focus of recent Consumers Council of Canada research.
The episode is titled Amazon’s Counterfeit Problem and pledges to explore why it is getting harder to tell what’s real and what’s fake online, as Canadians are on track to spend $64.5 billion online this year. The Consumers Council report Consumer Attitudes and Their Role in Reducing the Impact of Counterfeit and Pirated Goods and Services concluded that consumers find it difficult to identify the perils of buying counterfeit goods and pirated media, and industry intellectual property protection campaigns don’t help them.
The research included a 2,000 person national web survey and focus groups. It noted that consumers do not have the same ability to examine the goods, packaging and labelling that could help them determine authenticity. It noted that problematic goods pose serious risks to consumers, such as fake pharmaceuticals and forged safety certifications. Among the report’s recommendations:
• A single body to co-ordinate anti-fraud initiatives by governments across Canada.
• Business, government and consumer organization joint engagement to address marketplace risks born by consumers and facilitate consumer education.
• Governments and business should provide sustainable funding to consumer organizations to play an independent role in curbing marketplace fraud.
The report also urged stronger enforcement by governments of general consumer protections.
That theme was also an important part of a second 2019 Consumers Council research report. Super Complainers: Greater Public Inclusiveness in Government Consumer Complaint Handling noted the trend of Canadian regulators to reduce or even withdraw from pro-active inspections. In that report’s survey of 2,000 Canadian consumers, public confidence was low (84%) that government complaint handling would be helpful in distant transactions. Consumers supported measures that would reduce their risk in distant transactions such as a national consumer complaint data bank, international cooperative agreements and frequent issuance of consumer complaint trends.
A third Consumers Council of Canada report examined another element of consumer protection in online transactions. Consumer Redress, Chargebacks and Merchant Responses in Distant Transactions examined how remedies to different problems in distant (online or telephone) transactions can differ by how the consumer chose to pay for the purchase. It discussed how the protections offered by credit card chargeback programs compare to online dispute resolution choices, and how poorly chargeback protection is disclosed to consumers.
The program will be rebroadcast at 11 pm, and then available through TVO’s online archives.
In theory, unit pricing is supposed to make it easier for consumers to more fairly compare prices of different quantities. The practices of retailers and regulatory authorities have limited these benefits.
Unit pricing is the display of the price of a product at a standard unit of measurement adjacent to its selling price. Commonly grocery stores use it, in theory, to allow consumers to better compare the price difference between a 450 gram box of cereal and a 710 gram box of cereal, by showing the price of each box per a standard unit, such as 100 grams.
Widely introduced more than 40 years ago, it is not required by law in Canada, except in Quebec. Retailers in other jurisdictions provide unit pricing voluntarily, or not at all.
A report from the Consumers Council of Canada released earlier this year, concluded that retailers that use standardized unit pricing information stand to gain an advantage over those that do not by adopting standards-based pricing displays and educating customers about how to use the service. Unit Pricing: Time for a National Approach? noted that one persistent consumer complaint is about the lack of readability – the unit price information displayed is too small and often much less prominently presented than the basic price. Other common consumer complaints involve inappropriate units of measure as well as a lack of consumer awareness and understanding how to use the information.
The research included a survey of 2,000 Canadian consumers. Consumers use unit pricing to make informed choices, but “due to sporadic and unreliable retail practices” they often default to other methods to find the lowest prices. And those methods quite commonly are unreliable.
The report recommended that governments collaborate with retailers to explore better methods of delivering unit pricing to consumers, and that provincial ministries consider following Quebec’s lead and directly regulate price presentations.