If you are one of the thousands of Manitobans who own a cell phone, then the recent changes to The Consumer Protection Act (the “Act”) in Manitoba will affect you.
Manitoba’s new consumer protection laws for fair and clear cell phone contracts came 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 applies to contracts made primarily for personal, family or household use. The new legislation implements the following:
- it requires companies to provide a copy of the contract to consumers before the contract begins;
- it requires companies to disclose fully and explain all charges, fees and terms;
- it restricts companies from making unilateral changes to contract terms;
- it allows consumers to cancel contracts at any time, for a reasonable cancellation fee;
- it requires the minimum monthly cost to be included in advertisements; and
- it restricts automatic cell phone contract renewals.
The Act and regulations require cell phone providers to provide or disclose the following:
- the minimum monthly cost;
- all services available at no additional charge;
- maximum use limits, other restrictions and additional charges;
- optional services; and
- how any cancellation fee is calculated.
Providers can no longer automatically renew cell phone contracts for a fixed term on expiry . 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 have expired, the contract will renew on a month-to-month basis. Consumers have an automatic right to cancel a contract at any time on payment of any outstanding charges and a maximum cancellation fee, which is fixed by regulation. Here are some examples of how the cancellation fee is calculated:
- 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.For example:
You receive a $300 phone at no cost when you sign 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 pro-rated, based on a 48 month time period.For example:
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% of the remaining cost of the contract, whichever is less.
Provisions in a contract which give the supplier the right to amend the terms of the contract unilaterally are no longer valid. If a supplier attempts to make a unilateral amendment to a contract term, the consumer may be entitled to terminate the contract without penalty.
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 the consumer is not offered a replacement, the consumer does not have to pay for service while the phone is being repaired.
Companies will still be allowed to offer contracts that are three years or longer, and to 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 cell phone 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.
You can learn more about the changes to The Consumer Protection Act on the Government of Manitoba’s web site.
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