Ch.27 Consumer Protection Legislation

Question 1

Consumer protection legislation

Answer 1

Legislation control of the market is required to protect the public from unscrupulous operations

Legislation not uniform throughout Canada

Mix of federal and provincial statutes

Designed to redress some real or perceived unfairness in marketplace

Question 2

Types of consumer protection laws:

Answer 2

1. Product Safety
2. Product quality and performance
3. Credit granting
4. Credit reporting
5. Business practices

Question 3

Depending on protection required, laws take five different approaches:

Answer 3

1. Disclosure of information to consumer
2. Expanded consumer rights at law
3. Minimum standards for safety, quality, performance
4. Control of sellers and others by registration or licensing requirements
5. Prohibition of unethical business practices

Question 4

To be effective, consumer protection from hazardous products or services must:

Answer 4

Compensate for injury

Contain incentive for manufacturer or seller to take care

Question 5

Food and Drugs Act

Answer 5

Controls harmful products that may cause injury or illness

No civil right of action

Strict liability and penalties for breach

Question 6

Canada Consumer Products Safety Act (CCPSA)

Answer 6

Covers most non-commercial consumer goods (except food and drugs)

Including the manufacture, importation, sale, advertising, packaging and testing

Question 7

Hazardous Products Act

Answer 7

Prohibits manufacture and sale of products of an extremely dangerous character

Deals primarily with packaging (hazard warnings)

Question 8

Motor Vehicles Safety Act

Answer 8

Establishes safety standards for:
- Motor vehicles and vehicle parts, including aircraft
- Notice to consumers when unsafe parts or defects discovered
- Testing procedures
- Qualifications and licensing of all persons associated with maintenance and use

Question 9

Consumer information is related to safety and consumer protection

Answer 9

Protects consumers from deceptive or unfair practices

Disclosure of information about product or service

Prohibition of false or misleading information

Provide standards for consumers to make direct comparison of products and prices

Question 10

Weights and Measures Act

Answer 10

Establishes uniform system of weights and measures for all goods sold

Question 11

Consumer Packaging and Labeling Act

Answer 11

Prevention of false or misleading labelling and packaging

No civil cause of action for consumers

Question 12

Consumer Product Quality and Performance Protection

First area to protect consumers:

Answer 12

Prohibit sellers from exemptions under the Sale of Goods Act

Manufacturers of inferior goods continued to enjoy relative protection through privity of contract rules

Trend towards expansion of buyer’s rights and sellers’ obligations

Impose heavy burdens on sellers and manufacturers who provide products that fail to meet advertised performance claims

Question 13

Statutory warranties

Answer 13

• express warranties on goods provided by statute

Apply to all sales of consumer goods

Include a warranty that retailer has right to sell goods and that goods are free from liens

Requirement that goods be durable for reasonable period of time

Requires warranty that spare parts and repair will be available

Question 14

Itinerant sellers

Answer 14

sellers of goods who sell gods at the buyer’s residence (door-to-door)

High pressure/persuasive selling tactics

Buyer’s inability to leave the premises

Some provinces have prohibited door-to-door sales for certain products and services (e.g. heating)

Door-to-door sellers must be licensed or registered

Cooling-off period

Question 15

Cooling-off period

Answer 15

• time interval after a contract is signed that allows the buyer to repudiate the contract without liability

Question 16

(Itinerant Sellers) Legislation requires:

Answer 16

If sale exceeds a certain sum, must be in writing

Contract must describe goods, provide itemized price and give full statement of payment terms, disclosure, details of any security etc.

Question 17

Unfair Business Practices

Answer 17

business practices that mislead or treat the buyer unfairly

Question 18

Consumer protection legislation can be general or specific:

Answer 18

General - concerns all sectors of consumer-related business (e.g. Consumer Protection Act)
- Lists practices considered unfair

Specific - motor vehicle repairs (e.g. Auto repair legislation in Quebec and Ontario)

Question 19

Unconscionable transactions

Answer 19

-take advantage of vulnerable consumers or result in one-sided agreements in favour of seller
1. Take advantage of physical infirmity, illiteracy, inability to understand the language, ignorance of consumer
2. Price grossly exceeds value of similar goods on market
3. Contracts in which consumer has no reasonable probability of making payment of obligation in full

Question 20

Granting of credit depends on credit rating of consumer

Answer 20

In past, lack of information and inability to understand documents left debtor at mercy of lender or seller

Now legislation requires:
- Lender or seller to disclose true cost of credit
- Borrower provided with written statement
- Charges, bonuses, or amounts that borrower must pay in addition to interest, as well as interest amount

Question 21

Credit-reporting agencies supply lenders with credit reports on borrowers

Answer 21

Allows lender or seller to decide promptly if credit should be extended

Agencies keep information on borrower’s potential ability to pay

Potential for error:
- Concerns over use of information
- Accuracy of information