Archive for the ‘ Consumer Protection ’ Category

Contests Gone Wild: Controlling the Promotional Contest in Canada

 

 

Have you ever thought about organizing a Bikini Contest to give away a prize? What about organizing any promotional contest?

The reality is, promotional contests are absolutely everywhere.  Canadians love contests, and the contest industry is on a high. It’s almost impossible getting through your day without coming across some advertised contest. Whether you observe them online, on the radio, or on roadside billboards, the laws governing how these contests must run are crucial for every advertiser to be aware of in order to avoid severe criminal and civil penalties in the event of legal shortfalls. Read more

Bell Canada Pays Price for Misleading Advertising: Who’s Next?

 

 

 

After being taken on by the Competition Bureau, Bell Canada has agreed to pay a monetary fine of $10 million to the Bureau for engaging in misleading advertising.

Bell Canada’s advertised prices failed to include the many hidden fees such as modem rental and phone and digital television services that were later tacked on when consumers tried purchasing the advertised products or services. For example, Bell’s bundle package, which included cable, television and home phone services was advertised as low as $69.90/month but actual prices charged were $80.27 (about 15% more). An investigation launched by the Bureau determined that Bell has been engaging in this practice since December 2007. Read more

Quebec Lottery Commission Reaches Settlement With Addicted Gamblers: Will Other Provinces Follow Suit?

A  $500 million  dollar class action launched against  the Quebec Lottery Commission in 2001  has reportedly reached a tentative settlement agreement. An estimated 250,000 class members who have incurred therapy fees between 1994 and 2002 as a result of  becoming addicted to using Video Lottery Terminals (VLTs) are expected to settle their gambling claims for $50 million dollars, a far cry from the original amount sought.  The actual figures and terms of the agreement will be made public on January 16, 2010. In March 2010, a Quebec judge will decide on whether the settlement ought to be approved after hearing arguments from  class members unhappy with the agreement. The significance of this outcome will be likely to have an effect across Canada as similar class actions have been filed in Nova Scotia, Newfoundland, and Ontario.

According to many, this settlement is bittersweet. On the one hand, some compensation has been provided to those “victims” of addictive gambling. On the other hand, the fact that the settlement was not court ordered means that this is not seen as a legal admission of liability, and cannot be used as a precedent to help bind  similar matters in other jurisdictions. This would allow lottery corporations to maintain their operational  status quo without any concern for the need to adhere to legally set duties of care to addicted gamblers. However, although a binding legal precedent may not have been set,  the settlement  may still  have established a “moral precedent” to encourage similar settlements in other jurisdictions, but only time will tell.

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Arbitration Clauses as a Shield Against Class Actions?…What Will Canada’s Top Court Say?

The Supreme Court of Canada has granted leave to hear an appeal next year in the matter of Seidel v. Telus Communications Inc. This appeal will attempt to clarify the issue of whether arbitration clauses in consumer agreements may prevent consumers from launching class action proceedings. This decision should move Canadian commerce one step closer in resolving what has been a flip-flopping legal issue across Canada for years.

The use of arbitration clauses in consumer agreements is common practice employed by corporate entities in laying out the mechanisms available for their consumers to use in addressing issues that may arise from such transactions. In essence, these clauses mandate customers to engage in private dispute resolution mechanisms rather than resorting to the courts to address problems.  The advantages conferred by such clauses may include a much more expedient and cost effective method of settling matters than through the “clogged” court system.

However, the downside of arbitration clauses may relate to how they are worded. The mere fact that they are unilaterally inserted into consumer contracts as a condition of service means that consumers are often forced to agree to such terms if they want to obtain such service. In addition, corporate entities may see arbitration clauses as a strategy for insulating themselves from class action claims by forcing consumers to waive their rights to participate in a class action and agreeing to the prescribed binding arbitration process instead. Concerns have also been raised about resource rich corporations compensating arbitrators for decisions in their favour.

This begs the question: can consumers resort to the courts to pursue class claims against corporate entities or must reliance on arbitration clauses be adhered to? The state of the law has been unclear in Canada.

To demonstrate the lack of clarity, I will attempt to lay out the current situation in Canada with respect to the issue of arbitration clause applicability and class actions as follows:

Seidel, a Telus customer in British Columbia launched a class action against Telus for breach of contract and deceptive and unconscionable practices. At this time, the predominant case authority was MacKinnon v. Instaloans Financial Solutions Centres (Kelowna) Ltd. which held that an arbitration clause is inoperable if a court certifies a class action. Because the court had certified Seidel’s class action against Telus, Telus simply had to live with the class action launched against it despite its arbitration clause.

The Supreme Court of Canada then subsequently rendered its decision in Dell Computers v. Union Des Consommateurs and  Rogers Wireless Inc. v. Muroff. Both these appeals came out of the Quebec lower courts and dealt with the applicability of arbitration clauses and class actions. The court agreed that in Quebec, it is the arbitrator who will determine the jurisdiction to hear the matter, not the court. The Supreme Court of Canada in both cases permitted the arbitration mechanism to prevail over the class action route.

As a result of these decisions, Telus was able to successfully appeal its case to the British Columbia Court of Appeal, which stayed the class action against it on the authority of  Dell and Rogers Wireless Inc., which seems to place arbitration clauses ahead of pursuing class actions.

It’s important to note that these Supreme Court of Canada decisions relied on by Telus were specific to Quebec, which is not a common law province and the applicability of these decisions may not necessarily clarify the issue for the other common law provinces anxious for further guidance.  This guidance shouldn’t be too far off now that Seidel has been granted leave to appeal to Canada’s top court.

I think it would be prudent for the courts to avoid taking an overly pro corporate stance on this issue. Consumers should not be denied access to the courts and forced to be bound by an arbitration clause, especially where the clause is worded unfairly. We know that corporations’ true loyalty is to their shareholders, not consumers and the Supreme Court should be mindful of this when rendering its decision next year to provide consumers with the protections they deserve.

 
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