Inspecting businesses for consumer protection compliance

Parliament is back in session and the Ontario government has reintroduced Bill 27 (formerly Bill 218), Burden Reduction Act, 2016 (the “Bill”). The Bill amends 50 statutes in Ontario including the Consumer Protection Act (the “Act”).

Overview of the current inspection regime

The Bill increases the powers of inspectors under the Act, which provides inspectors with the power to enter, without a warrant, and inspect a business (during regular business hours) in order to confirm the business is complying with the Act. For instance, motor vehicle repair shops have a requirement to post certain signage on their premises. An inspector can attend the repair shop, without notice or a warrant, to check for compliance. If the inspector identifies any issues, the inspector may provide educational materials or a warning letter requiring the issues to be remedied within a specified time period. If the business continues to not comply, a Notice of Proposed Order may be issued. If the business does not request or successfully defend a hearing, a compliance order is issued (requiring immediate compliance with the Act). Where a Notice of Proposed Order is issued (uncontested) or upheld, the order is publicly disclosed on the Consumer Beware List, resulting in a negative impact to a company’s reputation and brand.

Proposed amendment

Amongst other amendments, the Bill proposes to broaden the information that is usually made publicly available about businesses that have received compliance orders. Additional information to be made available includes all of the business names and the locations of the business and any other prescribed information about the business. Even if it is one location of the business that is issued a compliance order, all locations will be publicized. The Bill also allows an inspector to inspect documents without entering the premises of the business – the inspector can contact the business and require the business to produce requested documents within 15 days from the day of the demand to produce.

ADR

The Bill introduces a voluntary mediation process for disputes between businesses and consumers, to be mediated by the Ministry of Government and Consumer Services. An alternative dispute process would be welcome to businesses as benefits include lower costs (though in some instances, depending on the nature of the dispute, ADR may be costly), a speedy process (avoiding court procedures), privacy (as information disclosed can be subject to mediation privilege) and flexibility in setting out the rules for the mediation process. However, the mediation agreement proposed by the Bill has to be in a form approved by the Director – which form will include the terms and conditions of the mediation. Further, the Director has the right to address the issue outside of the mediation process, even if the mediation results in a settlement.

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