Consumer Protection Act for Dealers

The Consumer Protection Act, 2002 sits beside the Motor Vehicle Dealers Act, 2002 as the second pillar of an Ontario dealer’s day-to-day legal obligations. The Motor Vehicle Dealers Act and its regulations govern how a registrant trades; the Consumer Protection Act governs how any Ontario business deals with a person buying for personal, family, or household use. Vehicle sales, leases, and repairs all fall inside it. The Better for Consumers, Better for Businesses Act, 2023 will replace the 2002 statute when its schedules are proclaimed in force; the rules tested below come from the version in force today, with notes on the 2023 changes where they are relevant.

The Consumer Protection Act protects consumers, not businesses. A corporation buying a fleet vehicle is a customer but not a consumer, and a tradesperson buying a cargo van for the business is also a customer but not a consumer. Section 1 of the Act draws that line, and it matters: most of the protections discussed here, including the unfair-practice rescission right and the repair rules, apply only when the buyer is acting for personal, family, or household purposes.

What this category covers

This category tests the parts of the Consumer Protection Act that show up most often in OMVIC discipline decisions and Licence Appeal Tribunal hearings: the two unfair-practice categories, the one-year rescission right that follows an unfair practice, the two-thirds repossession rule, and Part VI repair obligations. Expect questions on what counts as material, what the dealer can and cannot say in the course of negotiating a deal, and what remedy the consumer has when the dealer crosses the line.

Key rules to remember

False, misleading, or deceptive representations are prohibited

Section 14 of the Consumer Protection Act, 2002 declares it an unfair practice to make a false, misleading, or deceptive representation, then lists seventeen specific examples that bind every supplier. The examples that come up most often in vehicle sales include representing that goods are new when they are reconditioned, representing that goods have been used to an extent materially different from the fact (a rolled-back odometer), representing that a service or repair is needed when it is not, representing that a specific price advantage exists when it does not, and using exaggeration, innuendo, or ambiguity about a material fact. A representation can be made in writing, orally, or by conduct, and section 18(10) lets a court hear oral evidence even when a signed written contract says something different.

Unconscionable representations are also prohibited

Section 15 of the Act prohibits unconscionable representations: taking advantage of a consumer who cannot reasonably protect their own interests, charging a price that grossly exceeds what similar consumers pay for similar goods, entering an agreement when the consumer has no reasonable probability of paying, or applying undue pressure. A salesperson who lets an obviously impaired consumer sign a finance contract, or pressures a grieving spouse into a vehicle they cannot afford, is making an unconscionable representation regardless of what the paperwork says.

One unfair act is enough

Under section 17, performing one act described in section 14, 15, or 16 (renegotiating a price by holding the consumer’s goods) is deemed to be engaging in an unfair practice. The dealer cannot defend by pointing out that this was a one-time slip; a single false statement to one consumer is the prohibited conduct.

Rescission and the one-year window

Section 18 lets a consumer rescind a contract entered into after, or while, a person engaged in an unfair practice. The notice can be given in any form that communicates the intent and the reason, and section 18(3) gives the consumer one year from the date of the contract to deliver it. Rescission cancels the contract, every related agreement, every guarantee, every security interest given by the consumer, and every credit agreement extended or arranged by the dealer. Where rescission is no longer possible because a third party has acquired a good-faith interest in the vehicle, the consumer can recover damages or the difference between the price paid and the value received. A court may add exemplary or punitive damages.

The two-thirds repossession rule

Section 25 of the Consumer Protection Act says that once a consumer under a future-performance agreement has paid two-thirds or more of the total payment obligation, the supplier cannot retake possession of the goods on default without leave of the Superior Court of Justice. The rule applies to supplier credit; it does not apply to a separate bank loan. Section 15 of the Better for Consumers, Better for Businesses Act, 2023 keeps the two-thirds threshold but clarifies that the protection does not extend to a third-party credit agreement or a lease.

Repair estimates and the 10 per cent ceiling

Part VI of the Consumer Protection Act, sections 55 through 65, governs every repair to a consumer’s motor vehicle. Section 56 requires a written estimate before any work or charges, except where the consumer is offered an estimate and declines it and instead authorises a maximum dollar amount. Section 58(2) caps the final invoice at no more than 10 per cent above the estimate; anything above that the consumer is not required to pay. Section 61 requires the repairer to offer to return every removed part unless the consumer waives that right when authorising the work, and section 63 deems a 90-day or 5,000-kilometre warranty (whichever comes first) on every new or reconditioned part installed and the labour to install it.

No contracting out

Section 7 of the Act voids any term, acknowledgement, or waiver that purports to take away a consumer’s substantive or procedural rights under the statute. An “as is, no warranties” clause cannot defeat the deemed warranties under section 9, and a class-action waiver in fine print cannot stop a consumer from joining a class proceeding.

Common mistakes

• Treating the “10 per cent over estimate” rule as a target rather than a ceiling. Even a $50 overage on a $400 estimate breaches section 58(2) if the customer did not authorise it.
• Letting a salesperson tell a consumer the deal is approved by OMVIC, the bank, or a manufacturer when it is not. That is a section 14 paragraph 2 representation problem.
• Repossessing a vehicle on a dealer-financed sale once the consumer has paid two-thirds, without applying for leave of court.
• Sliding a “no warranty, sold as is” line into a consumer bill of sale and assuming it survives. Section 9(3) and section 7 void it on the spot.
• Throwing away the old parts after a brake or transmission job without offering them to the consumer first.
• Charging a higher labour rate for an insurance-funded repair than for the same job paid by the consumer directly. Section 64 forbids that.
• Treating a corporation buyer the same as a consumer buyer. Most Consumer Protection Act protections do not apply to a corporation, and confusing the two leads to wasted concessions.

How OMVIC enforces this

OMVIC investigators are appointed under both the Motor Vehicle Dealers Act and the Provincial Offences Act, and they can lay charges directly under the Consumer Protection Act. Where a dealer’s conduct also breaches the Code of Ethics in Ontario Regulation 332/08, the matter can be referred to the OMVIC discipline committee in addition to provincial prosecution. On a Consumer Protection Act conviction, an individual faces a maximum fine of $50,000 or imprisonment for two years less a day, and a corporation faces a maximum fine of $250,000. Consumers can also bring a private action in the Superior Court of Justice under section 18 of the Act, and the court may award rescission, damages, and punitive damages on top of any order made by the regulator.

Where to learn more

The statute is reproduced section by section on this site at the Consumer Protection Act, 2002 page, with anchors matching the citations above. The replacement statute is at the Better for Consumers, Better for Businesses Act, 2023 page; some schedules are not yet proclaimed in force, so check the dates on each section before relying on the new wording. The DealerPrep iPhone app carries the full bank of practice questions for this category for paid subscribers.