Federal-Provincial-Territorial Meeting of Ministers responsible for Consumer Affairs

BACKGROUNDER – Consumer Ministers’ Meeting Winnipeg, Manitoba, January 15-16, 2004

Consumer Ministers’ Meeting

Federal, provincial and territorial ministers responsible for consumer affairs met in Winnipeg, Manitoba, on January 15-16, 2004, for the sixth time under the auspices of the Agreement on Internal Trade. Chapter 8 of the Agreement calls upon the federal, provincial and territorial governments, through their consumer ministers, to cooperate in the enforcement of consumer protection measures. Consumer ministers accomplish this objective through regular meetings and through the work of their officials on the Consumer Measures Committee (CMC). Further information on the CMC is available at http://cmcweb.ca. Over the past number of years, ministers’ decisions have expanded and strengthened the level of consumer protection available to Canadians by: promoting harmonized regulations and policies; enhancing information sharing among enforcement agencies via mechanisms such as CANSHARE; and by providing reliable consumer information via the Canadian Consumer Handbook and the Canadian Consumer Information Gateway Web site, http://ConsumerInformation.ca. This most recent meeting continued a tradition of developing cooperative solutions to pressing consumer issues.

New Code of Practice for Consumer Protection in Electronic Commerce

The Canadian Code of Practice for Consumer Protection in Electronic Commerce establishes benchmarks for good business practices for merchants conducting online commercial activities. The Code leaves unchanged the rights, remedies and other obligations that may exist as a result of consumer protection, privacy or other laws and regulations, or other general or sector-specific voluntary codes of conduct to which vendors may subscribe.

The Working Group on Electronic Commerce and Consumers, composed of representatives from different sectors of the economy, was set up in fall 1999 to develop the Code, based on the Principles of Consumer Protection for Electronic Commerce: A Canadian Framework, which was released in August 1999. The Code is also consistent with the Organisation for Economic Co-operation and Development’s, Guidelines for Consumer Protection in the Context of Electronic Commerce. Draft versions of the Code were the subject of extensive consultations during 2001-02. In January 2003, the Working Group approved the Code, in principle, as a model for effective consumer protection in electronic commerce. The Code is available at http://cmcweb.ca.

Identity Theft

Identity theft is recognized as a growing problem that can leave a victim with a poor credit rating, ruined reputation and money losses. The Canadian Council of Better Business Bureaus estimates the cost of identity theft to consumers, banks, credit card firms, stores and other businesses is $2.5 billion annually. To address this problem, consumer ministers are focusing on victim assistance and public education, while other intergovernmental groups are addressing prevention and enforcement. An information kit of reliable information on identity theft has been developed (http://cmcweb.ca), which jurisdictions may customize. Identity Theft – Reducing the Risks is an information bulletin that was made available to jurisdictions and consumers in December 2003. Included in the kit is an identity theft statement, which can be used by victims to notify most major creditors of what has happened. Using this one standard form can help streamline the process of correcting the victim’s credit report and restoring their good reputation. The statement will streamline the process for the consumer and save time, enabling the victim to use a single form to notify at once multiple banks, retailers and credit card issuers of the identity theft. The information kit and identity theft statement for consumers have been developed in conjunction with major associations and financial institutions from the private sector, law enforcement bodies and consumer organizations.

Credit Card Chargebacks

A credit card chargeback is a remedy for consumers by which they may cancel or reverse a given credit card transaction and its associated interest charges. Until recently, credit card chargebacks have been implemented on a voluntary basis by major multi-purpose credit card issuers. Under the Internet Sales Contract Harmonization Template, agreed to by the ministers in May 2001, credit card chargeback rights correspond to the consumer’s right to cancel a contract in an Internet transaction between a supplier and the consumer under certain specific circumstances, such as non-delivery and billing error. The ministers have now called for the extension of the credit card chargeback rights found in the Template to apply, where feasible, to all forms of distance sales by way of either statute or contractual rights.

To further the previous consultations on chargebacks with consumer and business stakeholders, the ministers have asked officials to consult with the credit card industry to determine the most effective way to achieve these objectives and to report back in six months regarding progress. Ministers can then determine the best course of action.

Consumer Protection Across Jurisdictions

In May 2001, ministers responsible for consumer affairs endorsed the Internet Sales Contract Harmonization Template. At that time, the Template did not address the determination of jurisdiction in cross-border transactions. The ministers asked officials to develop options to address this issue. The existing framework for determining jurisdiction in cross-border transactions has been examined, and the need for a new approach was considered by a working group of federal, provincial and territorial officials, and the Uniform Law Conference of Canada (ULCC). They commissioned major research papers on the issue and, in November 2001, the CMC and ULCC formed a joint working group consisting of: CMC members representing the governments of Canada, Alberta, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, as well as ULCC representatives from the governments of Canada, Alberta, Manitoba, New Brunswick, Ontario, Quebec and Saskatchewan.

In July 2002, the joint working group issued a consultation paper to business and consumer stakeholders and the legal community. The paper examined the existing framework for determining jurisdiction in cross-border transactions, and considered the need for a new approach. The paper also proposed draft rules to the effect that, under most circumstances:

  • a consumer can have a case heard in the courts of the consumer’s own jurisdiction (choice of forum); and
  • the laws of the consumer’s jurisdiction apply (choice of law) for disputes arising from any form of distance sales (Internet, telephone, mail order) solicited in the consumer’s jurisdiction.
In the summer of 2003, uniform legislation was drafted, which could be added to provincial or territorial consumer protection legislation.

The purpose of the model legislation is to set out uniform jurisdictional rules with respect to cross-border business-to-consumer contracts within Canada. While jurisdictional issues have always existed, the increase in the number of cross-border transactions taking place over the Internet has elevated their importance. With cross-border transactions increasing, it is critical that the legal framework supporting consumer transactions across provincial or territorial borders be governed by consistent principles that lead to predictable results, regardless of the province or territory in which a particular consumer or vendor resides.

Consumer Protection in the Short-Term Credit Market

In the last decade, there has been tremendous growth in the small, short-term loan sector throughout North America. The sector includes payday lenders, cheque cashing outlets, pawnbrokers and other kinds of loan services. The demand for these loans is high, and consumers are faced with both excessive costs and the possibility of abusive practices, resulting in a need for improved consumer protection. Government, industry and consumer stakeholders will continue to work to establish a consumer protection framework that will determine best practices, encourage traditional financial institutions (i.e., banks and credit unions) to improve consumers’ access to financial services, and develop a public education program to raise awareness of the full costs of, and alternatives to, small, short-term loans.

Reliable, Relevant Consumer Information

The “Reality Choices” project was initiated in May 2001 at the Meeting of Ministers Responsible for Consumer Affairs in St. John’s, Newfoundland and Labrador. The project has resulted in jointly (federal/provincial/territorial) developed online booklets targeting young adults and first-time consumers. These booklets can be customized by each jurisdiction to include the most relevant information for their consumers. The topics covered include: dealing with credit; how to effectively manage money; a wide array of issues about moving and living independently; buying or leasing a vehicle; detailed explanations of warranties; how to handle door-to-door sales; and useful hints for shopping online. Identity theft and how to avoid it is also covered. The documents are available at http://cmcweb.ca.

Consumers seeking reliable information from over 400 sources are encouraged to visit the Canadian Consumer Information Gateway (http://ConsumerInformation.ca). The Gateway, which includes consumer information from federal, provincial and territorial governments, also features the “Complaint Courier,” an online tool that formulates and sends complaints to the appropriate organization.

The ministers also released the 2004 edition of the Canadian Consumer Handbook (http://cmcweb.ca).