In 2011, 2012 and 2013, the second highest number of consumer complaints made to the Ontario Ministry of Consumer Services had to do with aggressive and deceptive door-to-door water heater rentals and sales. In response, the Ontario government passed amendments to the Consumer Protection Act, 2002 (the “Act”) to allow for enhanced disclosure and consumer rights for water heater rentals. These long-awaited changes, along with Regulations setting out details of the new requirements, are set to come into force on April 1, 2015. The changes, which significantly alter the way in which water heaters are rented and sold door-to-door, can be grouped into three broad categories:
- Increased disclosure for consumers;
- A longer cooling-off period in which consumers can cancel an agreement without any reason; and
- Required and scripted telephone calls with consumers verifying the sale.
New Regulations under the Act require specific information to be set out in all “Direct Agreements” (door-to-door transactions) involving the supply of water heaters (an “Agreement”). Subject to certain exceptions, the cover page of the Agreement must be a disclosure statement entitled “Water Heater Contracts – What You Need to Know” that provides basic information to the consumer about their rights. If the consumer initiates contact with the supplier or the consumer’s existing water heater is subject to a product recall, different disclosure statements (containing similar information) are required.
On the page immediately following the disclosure statements, the Agreement must set out the following:
- the total amount payable under the Agreement, including taxes;
- an itemized list with the amounts for one time or additional charges, such as installation or late payment charges;
- a list of charges for terminating the Agreement; and
- if the Agreement is a lease, a reasonable estimate of the retail price of the water heater and the total amount payable under the lease based on a ten-year term.
Various other information is required as well, including which party will bear the costs associated with removing an existing water heater supplied by another company.
Longer Cooling-Off Period
Changes to the Act double the cooling-off period (i.e. the period in which a consumer may cancel an agreement without any reason) to 20 days after the consumer receives a written copy of a Direct Agreement involving the supply of water heaters. There are specific rules about where and how this right is to be communicated to the consumer within the Agreement. Moreover, subject to certain exceptions, the supplier under the Agreement may not supply the water heater until the cooling-off period has expired. If a supplier does so in violation of the Act, the goods are deemed to be unsolicited and the supplier is liable to the consumer for any charges they incur from third parties associated with the violation.
If the consumer initiates contact with the supplier or the consumer’s existing water heater is subject to a product recall, the 20-day cooling-off period does not apply.
Verification of Sale
Finally, a new Regulation under the Act requires the supplier, subject to certain exceptions, to verify the Agreement with the customer by making scripted and recorded telephone calls between the 2nd and 15th day of the cooling-off period. An Agreement is not verified if the scripted verification call is never made or if the consumer indicates they are not verifying it. If the Agreement is not verified, it is cancelled.
If the consumer initiates contact with the supplier or the consumer’s existing water heater is subject to a product recall, the Agreement does not need to be verified.
Daanish Samadmoten is an articling student at Aird & Berlis LLP.