Conventional thinking has been that the most serious consumer protection enforcement tends to be under federal law (e.g., the Competition Act or Criminal Code). That reasoning changed somewhat last week with an Oakville company being found guilty by a Newmarket Ontario court of violating the Ontario Consumer Protection Act (the “CPA”), fined $250,000, ordered to pay more than $100,000 in restitution to customers with the firm’s director also sentenced to six months in jail. These are the most significant penalties ever imposed against a business under the CPA.
The Oakville heating and cooling company and its director had been charged with 21 violations of the CPA. In making the announcement, Ontario’s Ministry of Consumer Services said:
“It had been alleged that between March and November 2008, Mr. Preston and his company misled consumers in Markham, Stouffville, Toronto and Mississauga by providing contracts and accepting payments for services and products he knew his failing company would be unable to provide. Heating and cooling systems that were supplied malfunctioned shortly after installation and consumers were not given refunds when contracts were cancelled.”
The CPA governs many common types of consumer transactions in Ontario and regulates, among other things, consumer agreements (including future performance, time share, Internet, distance and direct sales agreements), certain types of misleading claims and some specific sectors (including auto repair, credit and leasing).
Some specific types of contractual remedies the CPA provides include cancellation and refund rights, mandatory disclosure of terms (e.g., for future performance contracts) and accurate descriptions of charges.
The CPA generally prohibits false, misleading or deceptive claims in relation to consumer transactions and includes a broad list of examples that include false claims in relation to sponsorship, quality, performance and availability and performance.
Potential penalties under the CPA include fines of to $50,000 (for individuals), $250,000 (for corporations) and imprisonment for up to two years less a day.
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