A Primer on Alberta’s Consumer Protection Act and the Litigation of Consumer Contracts

In most circumstances where a consumer wishes to get out of a contract for the provision of goods and services their only recourse is through the usual principles of contract law.

However, the Consumer Protection Act, c C-26.3 (the “Act”) and its associated regulations provide consumers with the means of addressing unfair contracts which are entered into pursuant to various consumer transactions.

What does the Act protect against?

While the Act applies to multiple facets of consumer transactions, its most notable form of protection pertains to unfair practices which are used by suppliers of goods and services (the “Suppliers”) to convince consumers to contract with them (the “Consumer Contract”), as well as unfair practices which arise during the life of a Consumer Contract.

The Act lists various examples of unfair practices, including:

         I.  Suppliers taking advantage of a consumer’s inability to understand the character, nature, language, or effect of the consumer transaction; 

       II.   Suppliers charging prices for goods or services that grossly exceed the price at which similar goods or services are sold for, without informing the consumer of the difference in price and the reason for it; 

     III.  Suppliers entering into consumer transactions if they know or ought to know that the consumer is probably unable to pay the full price for the goods or services; and 

    IV. Suppliers representing that they can supply goods or services when in fact they cannot.

Who does the Act apply to?

The Act applies to consumers and Suppliers, which are defined terms under the Act.

Specifically, consumers are generally individuals who:

         I.  Receive or have the right to receive goods or services from Suppliers as a result of a purchase, lease, gift, contest, or other arrangement, but do not include individuals who intend to sell the goods after receiving them; 

       II.  Have legal obligations to compensate Suppliers for goods that have been or are to be supplied to another individual and the other individual does not intend to sell the goods after receiving them; or 

     III.  Have legal obligations to compensate Suppliers for services that have been or are to be supplied to another individual.

Likewise, Suppliers are generally individuals or corporations who, in the course of their business:

         I.   Provide goods or services to consumers; 

       II.    Manufacture, assemble, or produce goods; 

     III.     Promote the use or purchase of goods or services; or 

    IV.      Receive or are entitled to receive money or other consideration as a result of the provision of goods or services to consumers.

Moreover, the definition of Suppliers under the Act extends to the salespeople, employees, representatives, and agents of the Suppliers.

When does the Act apply?

The Act applies to unfair practices which arise in the following circumstances:

         I.   Where the Suppliers or consumers are residents of Alberta; 

       II.   Where they involve a consumer transaction in which the offer or acceptance is made in or sent from Alberta; 

     III.     Where they are made or received in Alberta and involve the Supplier’s representative; and 

    IV.      Where they are specified in the regulations made under the Act.

Moreover, the Act does not permit Suppliers to allow consumers to contract out of and/or waive their right to the protections under the Act.

What does the Act apply to?

The Act generally applies to any unfair practices that arise in the context of a consumer transaction, so long as the parties are Suppliers and consumers, and the Consumer Contract pertains to goods or services, as defined under the Act.

Furthermore, the Act and its associated regulations also apply to certain specific consumer transactions which import specific considerations for the same.

For example, the Act has specific sections or regulations that apply to the following:

         I.   Automotive businesses (e.g., car dealerships); 

       II.    Direct sales transactions (i.e., “door-to-door” sales); and 

     III.     Home inspection businesses.

It is important to note that whether specific goods or services are afforded protection under the Act may depend on the specific regulations and/or sections of the Act which pertaining to a specific consumer transaction.

How does the Act provide recourse for a consumer?

If a Consumer Contract was entered into because of an unfair practice, or if an unfair practice occurs during the life of the Consumer Contract, the consumer is entitled to cancel the Consumer Contract at no cost or penalty to them.

If cancelling the contract is impossible because the goods or services can no longer be returned or cancelled, the consumer is entitled to recover monetary damages for the amount by which their payment under the Consumer Contract exceeded the value of the goods or services they received and/or other damages arising from the unfair practice(s) (the “Damages Claim”).

Whether a consumer is seeking the to cancel the Consumer Contract and/or pursue a Damages Claim, they are required to provide Suppliers with notice of the same. Notice must meet certain requirements, most importantly:

         I.   The notice must be given within one year of the Suppliers’ being found to have engaged in the unfair practice(s);

        II.   The notice must indicate the consumer’s intention to proceed with the Contract Cancellation or the Damages Claim; and

      III.    The notice must indicate the consumer’s reasons for proceeding with the Contract Cancellation or the Damages Claim.

If, after giving notice, the consumer does not receive a satisfactory response from the Suppliers within a prescribed time, the consumer can commence a lawsuit against the Suppliers and/or their principals, directors, managers, employees, or agents who engaged in or acquiesced in the unfair practice(s) in either the Alberta Court of Justice or the Alberta Court of King’s Bench (the “Unfair Practice(s) Lawsuit”).

A Court has a wide range of relief it can provide to the consumer as part of the Unfair Practice(s) Lawsuit, which includes:

         I.   Awarding monetary damages to the consumer for damages or losses suffered, which includes punitive or exemplary damages, as well as a portion of legal costs incurred for the Unfair Practice(s) Lawsuit; 

       II.    Declaring that the conduct of the Suppliers’ is an unfair practice and granting an order preventing the Suppliers from continuing to do the same; or 

     III.     Granting an order which treats the Consumer Contract as having never existed or forcing the Suppliers to comply with the Consumer Contract and provide the goods or services as promised.

Moreover, and in making a decision in the Unfair Practice(s) Lawsuit, a Court is required to consider whether the consumer made a reasonable effort to minimize any damage resulting from the unfair practice(s), and to resolve the dispute with the Suppliers, before commencing the Unfair Practice(s) Lawsuit.

Lastly, while the consumer is free to commence the Unfair Practice(s) Lawsuit in either the Alberta Court of Justice or the Alberta Court of King’s Bench, the choice of where to do so will largely depend on whether a Court has the jurisdiction to adjudicate the subject matter of the Unfair Practice(s) Lawsuit, as well as any preferences for the procedure in either level of Court.

Importantly, if the Unfair Practice(s) Lawsuit is commenced in the Alberta Court of King’s Bench, as opposed to the Alberta Court of Justice, the consumer must serve the Director appointed pursuant to the Act with the Statement of Claim for the Unfair Practice(s) Lawsuit before they are permitted to take further steps in the same.

Conclusion

While the Act is a powerful tool available to consumers to address and receive relief from unfair consumer transactions, and in many ways has simplified the legal process available to consumers to accomplish the same, there can be many nuances which apply to any specific consumer transaction generally, or Consumer Contract specifically, that need to be properly evaluated when determining the available legal options.

As such, if you think you have been, or are, a victim of an unfair consumer transaction, do not hesitate to reach out to Martin Abramowski and the other members of SB LLP’s litigation department to determine what recourse you may have and what steps you need to take.