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2010, Community Law School
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About our presenter…
Margaret Capes, B.A. (Hons.), LL.B., M.Ad.Ed, is Legal
Education Coordinator of Community Law School (SarniaLambton) Inc. She also acts as Review Counsel for
Community Legal Services, as an adjunct professor in the
clinical law program, and as faculty advisor for Pro Bono
Students Canada and the Dispute Resolution Centre, all at
the Faculty of Law, University of Western Ontario. She is the
former Executive Director of Community Legal Assistance
Sarnia.
2010, Community Law School
(Sarnia-Lambton) Inc.
Hot Topics in
Consumer Protection:
Personal Development
Service Agreements
Webinar Overview
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Governing Law: the Consumer Protection Act, 2002
Examples of Prepaid Membership Agreements
Exceptions to Coverage Under the Act
Consumer Rights Regarding Personal Development Service Agreements:
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Consumer Remedies
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Freedom from Unfair Business Practices
Contract Requirements
Cooling-off Period
Payment of Fees
Extension or Renewal
Presold Memberships
Warranty and Waivers
Unsolicited Goods or Services
Cancellation
Rescission
Complaint to the Ministry
Civil Lawsuit
Appendix
Closing
2010, Community Law School
(Sarnia-Lambton) Inc.
The Consumer Protection Act, 2002
and Personal Development Service Agreements
• Personal development service agreements are governed by
provincial law.
• In Ontario, the Consumer Protection Act, 2002 is the
governing law that protects consumers.
• The CPA covers any agreement, the cost of which is more than
$50.
• The CPA both sets affirmative requirements for agreements it
governs and prohibits a variety of unfair business practices, all
of which we will discuss in further depth.
2010, Community Law School
(Sarnia-Lambton) Inc.
Examples of Personal Development
Service Agreements
The CPA defines personal development service agreements
(sometimes called prepaid membership agreements) as
services that are provided for:
• Health, fitness, diet, or matters of a similar nature;
• Modeling and talent;
• Martial arts, sports, dance, or similar activities; and
• Any facility provided for instruction, or for the
provision of services.
2010, Community Law School
(Sarnia-Lambton) Inc.
Exceptions to Coverage Under the CPA
Certain types of clubs and activities are excluded from the
Act’s definition of a personal development service agreement,
and are therefore exempted from the provisions of the Act.
They are:
 Nonprofit or cooperative organizations;
 Private clubs primarily owned by the members;
 Charitable or municipal organizations, and any
agency of the Province of Ontario; and
 Golf clubs.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Freedom From
Unfair Business Practices
 The Consumer Protection Act, 2002 specifically
prohibits two types of unfair business practices,
which we will discuss in more detail shortly:
• Making a false, misleading or deceptive
representation, and
• Making an unconscionable representation.
2010, Community Law School
(Sarnia-Lambton) Inc.
Unfair Business Practices: False,
Misleading or
Deceptive Representations
• False, misleading and deceptive representations fall
generally into four categories:
• Representations as to the quality, characteristics, condition, or
“special” nature of the goods or services;
• The current or future availability of the goods or services;
• The need for the goods or service; and
• The cost, price advantage, or benefit of the good or service to the
consumer.
• Please refer to the Appendix for more a detailed list
of false, misleading, and deceptive representations as
defined by the CPA.
2010, Community Law School
(Sarnia-Lambton) Inc.
Unfair Business Practices:
Unconscionable Representations
• Some business practices are so egregious that they are deemed
unconscionable under the CPA. They include:
• Taking advantage of the disability, ignorance, language
barriers, or illiteracy of the consumer;
• Grossly overcharging for the good or service;
• Using excessively one-sided or otherwise inequitable
contracts to the detriment of the consumer;
• Obligations that the consumer has no reasonable
probability of paying in full;
• Misleading statements of opinion that the consumer relies
on or is likely to rely on, to their detriment; and
• Using pressure tactics to persuade the consumer to enter
into the transaction.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Contract Requirements
The CPA requires all personal development service
agreements to include:
• The name of the consumer;
• The name, address, and telephone number of the service provider, any
other contact information such as facsimile number or email address, and if
different, the name under which the provider carries on business;
• The name of the person(s) who solicited, negotiated, or concluded the
agreement with the consumer;
• The address of the facility at which the services will be available;
• A full description of the services purchased;
• The date on or by which each of the purchased services will be available;
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Contract Requirements, Cont.
• The total amount payable, and the terms and method of payment;
• The date the agreement is entered into, and the commencement and expiry dates;
• Any renewal or extension provisions; and
• A statement of consumer rights as prescribed by the CPA, in a font size of not
smaller than 10, with a heading of font size not less than 12.
Special provisions are required if the agreement:
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includes a trade-in arrangement;
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if the service will not be available at the time a payment for the service is required;
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if there are renewal or extension provisions; and/or
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if goods are to be provided as part of the agreement.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Cooling-off Period
• The CPA provides for an automatic 10-day cooling-off period.
• May cancel for any reason within 10 days of receipt of a written copy of
the agreement, or within 10 days of the date that the services in the
agreement become available, whichever is later.
• Consumer is not required give a reason for canceling.
• Consumer may not be charged a penalty for canceling.
• May cancel within one year of entering into the agreement if a copy of
the agreement is not received.
• Any method may be used but written notice (facsimile, registered mail,
or personal, receipted delivery) is recommended.
• Sample cancellation letters are available on the Ministry of Consumer
Services website
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Payment of Fees
• If a club or service charges initiation fees in addition to the membership fee,
the initiation fee may not be more than twice the annual membership fee.
• Only one initiation fee may be charged to the consumer.
• A club or service must offer the option of paying membership fees and any
initiation fee in monthly installments.
• An extra fee may be added for an installment payment option, but that fee
may not be more than a 25 percent increase over what the upfront, lump-sum
fee would be.
• This gives the consumer a means of protecting against potential bankruptcy
of the facility and loss of a full year’s prepaid fees.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights: Extension or Renewal
 A personal development services contract cannot have a term longer than one
year.
 If the consumer wishes to continue the membership or services, she or he
must renew the contract.
 If the contract contains an automatic renewal provision:
• The service provider must give advance notice at least 30 days but not more than
90 days before the renewal date;
• The notice must give the renewal date, and clearly note any changes that are
being made to the agreement;
• The consumer has the right to not renew the agreement by so notifying the
service provider.
 If a membership agreement is renewed without proper notice having been
given, the consumer may cancel the contract at any time and demand return
of any prepaid but unused fees.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights:
Presold Memberships
The CPA affords special protections for consumers
who join a club that has not yet opened:
• Owners may pre-sell memberships before a club is open,
but the membership fees collected must be held by a
registered trust corporation that acts as a trustee.
• The trustee may not release the funds until the personal
development services are made available to the consumer
(e.g., the club opens to members).
• If there is a delay in opening, the consumer may cancel the
membership and demand a refund of prepaid fees.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights:
Warranty and Waivers
 The CPA requires that services provided under a personal development
service agreement must be of a reasonably acceptable quality.
• This creates a minimum warranty on behalf of the consumer, and gives the
consumer the right to void the agreement if the services fail to meet the
minimum standard.
 The CPA also prohibits certain contract provisions.
• An agreement may not constitute a waiver of the consumer’s substantive or
procedural rights under the Act. For example, a contract cannot state that the
consumer waives his or her right to cancel during the cooling-off period.
 Also, if a service provider makes a unilateral change to the terms of the
contract, the consumer must be notified of the change and consent to it.
• For example, membership fees cannot be increased and the higher fee imposed
on a consumer without giving notice to the consumer and obtaining the
consumer’s consent to pay the higher the fee
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Rights:
Unsolicited Goods or Services
 A company may not bill a consumer for goods or services that
were not requested, or for goods or services that are different
from those originally agreed upon.
 The consumer is not required to pay for such goods or
services, and may demand a refund if what was delivered is
not what was agreed upon and the consumer has prepaid.
 A consumer who has made payment for unsolicited goods or
services may demand a refund within one year of having made
the payment.
 As with all notices, the consumer should make a refund
demand in writing and use a delivery method that will give the
consumer proof that the notice was given.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Remedies: Cancellation
• A consumer may cancel a personal development service agreement,
without penalty, at any time during the cooling-off period.
• The consumer may give any type of cancellation notice, but written notice
by any method that gives the consumer proof that notice was given is
recommended.
• A sample cancellation letter is available on the Ministry of Consumer
Services website.
• Cancellation operates to cancel the agreement as if it never existed.
• All sums paid by the consumer must be refunded if the agreement is
cancelled.
• If the seller refuses to issue a refund, a consumer may complain to the
Ministry, or commence a civil action under the CPA.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Remedies: Rescission
• A consumer may rescind any agreement entered into while the
other party engaged in an unfair business practice under the Act.
• If rescinded, the agreement and all related agreements, guarantees,
and payment security are cancelled as if they never existed.
• Notice of rescission must be given within one year after entering
into the agreement (written notice is recommended).
• If rescission is not feasible, the consumer may recover the amount
by which payment exceeded the actual value of the goods or
services, or damages, or both.
• Sample rescission letters are available on the Ministry of
Consumer Services website.
• If the consumer does not get a satisfactory response from the
seller, he or she may complain to the Ministry, or commence a
civil action under the CPA.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Remedies: Complaint to the Ministry
• If the service provider refuses to remedy the matter, the
consumer should report the problem to the Ministry of
Consumer Services.
• Online complaint forms are available on the Ministry’s
website.
• The Ministry has broad investigative and
remedial powers.
• The Ministry may order the seller to comply with the
provisions of the Consumer Protection Act, 2002.
• The Ministry may also bring charges in Provincial Offences
Court.
• The Provincial Offences Court may, upon conviction, impose
upon an individual a fine of up to $50,000, or imprisonment
for a term of not more than two years less a day, or both.
• A corporation that is convicted may be fined up to $250,000.
2010, Community Law School
(Sarnia-Lambton) Inc.
Consumer Remedies: Civil Lawsuit
• If the consumer has given notice of cancellation or rescission
but has not received a satisfactory response, he or she may
commence a civil suit.
• Exemplary or punitive damages may be awarded in such a suit,
in addition to any other remedy that may be available.
• As private lawsuits are expensive, a consumer may want to
first file a complaint with the Ministry of Consumer Services
to see if that results in acceptable redress for the consumer.
2010, Community Law School
(Sarnia-Lambton) Inc.
Appendix: False, Misleading, and Deceptive Representations
While not intended to preclude actions based upon other representations that
would qualify as unfair under the Consumer Protection Act, 2002, the
following are specifically mentioned as examples of false, misleading, or
deceptive representations:
 That the goods or services have sponsorship, approval, performance
characteristics, accessories, uses, ingredients, benefits, or qualities that they do
not have;
 That the person supplying the goods or services has sponsorship, approval,
status, affiliation or connection that the person does not have;
 That the goods or services are of a particular standards, quality, grade, style, or
model, if they are not;
 That the goods are new, or unused, if they are not or are reconditioned or
reclaimed;
 That the goods have been used to an extent that is materially different from the
fact;
2010, Community Law School
(Sarnia-Lambton) Inc.
Appendix: False, Misleading,
and Deceptive Representations, cont.
 That the goods or services are available for a reason that does not exist;
 That the goods or services have been supplied in accordance with a
previous representation, if they have not;
 That the goods or services, or any part thereof, are available when the
person making the representation knows or should know that they are not;
 That the goods or services, or any part thereof, will be available by a
specified time when the person making the representation knows or should
know that they will not be available by that time;
 That a service, part, replacement or repair is needed or advisable, if it is
not;
2010, Community Law School
(Sarnia-Lambton) Inc.
Appendix: False, Misleading,
and Deceptive Representations, cont.
 That a specific price advantage exists, when it does not;
 That misrepresents the authority of a salesperson, representative, employee,
or agent to negotiate the final terms of the agreement;
 That the transaction involves or does not involve rights, remedies, or
obligations if the representation is false, misleading, or deceptive;
 That misrepresents the purpose or intent of any solicitation of, or
communication with, a consumer;
 That misrepresent the purpose of any charge or proposed charge; or
 That misrepresents or exaggerates the benefits that are likely to flow to a
consumer if they help a person obtain new or potential customers.
2010, Community Law School
(Sarnia-Lambton) Inc.
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2010, Community Law School
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