On June 8, 2011, the Quebec government tabled legislation representing the third phase of its efforts to modernize the province’s Consumer Protection Act. Bill 24, An Act mainly to combat consumer debt overload and modernize consumer credit card rules is intended to reduce the level of indebtedness among Quebec consumers, improve access to information on consumer credit and strengthen the protection of vulnerable consumers.
Under the proposed Bill 24, consumers will benefit from the following new rights and advantages:
- The period during which consumers may unilaterally cancel certain credit contracts will be extended from two to seven days.
- Consumers will be able to withdraw from accessory contracts to a credit contract at any time, provided that the accessory contract was not required as a condition of the credit contract.
- Consumers not already in default will be able to invoke force majeure if unable to meet the terms of a credit contract, and may even apply to the court to modify the terms and conditions of payment or be granted the right to return the purchased goods.
- Additional proposed amendments regarding direct sales contracts, distance contracts, instalment sale contracts, permits and offences have also been added to benefit consumers.
Bill 24 will also impose new duties on creditors, while strengthening some existing obligations:
- Certain businesses and financial institutions will be required to verify a consumer’s capacity to repay prior to entering into any credit agreement or increasing the amount of credit extended to the consumer.
- Creditors will no longer be permitted to grant a higher credit limit than that requested by a consumer, or distribute pre-authorized credit cards through the mail.
- Any unilateral increase of a consumer’s credit limit cannot be invoked against the consumer, nor will the consumer be required to repay the amounts charged by reason of that increase.
- Any false or misleading representation to consumers that credit may improve their financial situation will be prohibited.
- The use of a picture in an advertisement that does not accurately depict the goods advertised will be prohibited.
- Creditors may no longer be permitted to offer a product or service in order to incite a consumer to apply for a credit card.
- The rules applicable to long-term leasing contracts may also be modified with respect to amendment procedures, contract content, cancellation periods, purchased options, the right of repossession and subleasing.
The proposed changes under Bill 24 are significant, numerous and far-reaching in their application. Corporations, retail lenders and financial institutions engaged in consumer-directed businesses should take note of these proposed changes to the Consumer Protection Act and would be well advised to consult legal counsel in order to fully ascertain the scope of the proposed amendments and their consequences.