If you are one of the thousands of Manitobans who own a cell phone, then the upcoming changes to the Consumer Protection Act in Manitoba will affect you.
Manitoba’s new consumer protection laws for fair and clear cell phone contracts will come into effect on September 15, 2012. The rules focus on ensuring that contracts are clear and provide all important information for consumers. They also ensure that cell phone contracts are fair to both consumers and businesses. The new legislation:
- Requires companies to provide a copy of the contract to consumers before the contract begins;
- Requires companies to fully disclose and explain all charges fees and terms;
- Restricts companies from making unilateral changes to contract terms;
- Allows consumer to cancel contracts at any time, for a reasonable cancellation fee;
- Requires the minimum monthly cost to be included in advertisements; and
- Restricts automatic cell phone contract renewals.
Specifically related to the cell phone contracts, they must provide clear and detailed information on:
- Minimum monthly cost
- All services available at no additional charge
- Maximum use limits, other restrictions and additional charges
- Optional services
- How any cancellation fee is calculated
Providers can no longer automatically renew cell phone contracts under the act. At least 60 days before a cell phone contract is set to expire, the provider must provide notice related to the contract expiration. If the consumer does not contact the provider before the 60 days has expired, the contract will renew on a month-to-month basis.
Old contract terms that stated. “Company reserves the right to change any products, services or charges, at any time” are no longer valid. Providers can no longer change a cell phone contract unless it directly benefits the consumer.
Cancellation fee’s are even easier to calculate now. Here are some examples:
- If you were given a phone for no cost or at a reduced rate when you signed up for a fixed term contract, the cancellation fee will be based on the value of the phone, pro-rated over the remaining term of the contract.
You receive a $300 phone at no cost when you signed a three-year (36 month) contract. You cancel the contract after one year (12 months). The maximum cancellation fee is $200: $300- ($300×12/36) = $200
- If you were given a phone for no cost or at a reduced rate when you signed an indeterminate contract (no fixed term), the maximum cancellation fee is also prorated, based on a 48 month time period.
You receive a $300 phone at no cost when you sign a no-term contract. You cancel the contract after 12 months. The maximum cancellation fee is$225: $300 ($300 x 12 / 48) = $225.
- If you were not given a phone as an incentive for signing a contract (you may have used a phone you already had or bought a phone to use), the maximum cancellation fee is $50 or 10 per cent of the remaining cost of the contract, whichever is less.
Consumers will also benefit from the new laws if their cell phone is defective. Under the changes to the act, If the phone provided by the carrier is being repaired and consumer not offered a replacement, consumer does not have to pay for service while phone being repaired.
Companies will still be allowed to offer contracts that are three years or longer, and charge fees to unlock a cell phone or provide paper bills. However, the charges, fees and terms of these services now must be clearly disclosed in the cellphone contract.
The Consumer Protection Office will be monitoring industry practices to ensure compliance with the new legislation. Businesses that do not comply may be issued administrative penalties of up to $1,000 for the first offence, $3,000 for the second offence and $5,000 for all subsequent offences.
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