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Refunds for Defective Products: Consumer Protection Laws in Ontario

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Refunds for Defective Products: Consumer Protection Laws in Ontario

This is my first thread here. Sorry - it's a bit lenghty.

I’ve done a fair amount of research into the question of defective products, and whether Ontario retailers are required by law to provide a refund (if the customer wants one).

These and other topics are covered by the Ontario Consumer Protection Act (CPA of 2002) and Sale of Goods Act (SGA of 1994).

Some notes:
- There are similar laws in most provinces, but I’m only covering Ontario.
- These laws provide many benefits to consumers, but I’m focusing on defective products.
- There are no laws forcing a refund simply because the customer changed their mind.

-----

There are two types of sources:

- Online articles explaining the laws.
- The laws themselves.

Since the laws are in technical language, and there are two Acts to consider, I’m only posting links to reputable online articles that summarize the laws.

If people seem interested, I can also post links to the laws themselves, quoting the relevant sections.

-----

1 – Ellen Roseman, “If the product's a dud, insist on your money back"

http://www.moneyville.ca/blog/post/9026 ... money-back

- She’s an experienced consumer advocate.
- Article provides a good overview of the laws, specifically for refunds.
- Useful quotes:

“… a retailer is liable to a purchaser for a defective product.” (which could mean “exchange”, but in the article’s context means “refund” (i.e., “money back”).

“… retailers have to sell you a product that works.If you find a dud in the package when you open it, don't let them shrug off their obligation to give your money back.” (Note that “obligation” means they must by law give you a refund, i.e., “money back”).


2 – Ellen Roseman, “Working to fix products that don’t work"

http://www.moneyville.ca/article/930023 ... don-t-work

- Interesting quote:

"I’m shocked that some people wait so long to get appliances working again. Under the law, manufacturers and retailers have a duty to supply products fit for the intended purpose.

If you’re stranded, go to small claims court and cite the Sale of Goods Act as an argument to get your money back."


3 – Miller Tomson, “ARE YOU READY FOR THE ONTARIO CONSUMER PROTECTION ACT, 2002?”

http://www.millerthomson.com/assets/...05%20Final.pdf

- Written for businesses in Ontario.
- Not previously posted by me.
- Useful quotes:

“A consumer is not bound by any consumer agreement that does not comply with the Act and regulations.”

“When a consumer cancels an agreement, the supplier must refund any payment made ... The supplier must do this within fifteen (15) days.”

“Credit Card Charge Back … where the consumer cancels the agreement and the supplier has not provided the full refund, this remedy will be available to the consumer.”

“The credit card issuer has thirty (30) days in which to acknowledge the consumer’s request.”


4 – O’Connor MacLeod Hanna, “Ontario’s New Consumer Protection Law”

http://www.omh.ca/ontarios-new-consumer ... n-law.html

- Written for businesses in Ontario.
- Useful quotes:

“The primary remedy available to a consumer under the Act is the consumer’s right to cancel an agreement.”

“When a consumer cancels an agreement in accordance with the Act, the consumer is obligated to return the goods or permit the goods to be repossessed and the supplier must provide a refund within 15 days. “

“When a consumer does not receive a response from a supplier with respect to a refund, the consumer may be entitled to recover the refund from the credit card issuer for the card through which the payment was made.”

“A request for cancellation of charges must be made in writing to the credit card issuer within sixty days of the date the refund was due.“

“The credit card issuer then has thirty days to acknowledge the consumer’s request.”

“Any person convicted of contravening the Act may be held liable to pay a maximum fine of $50,000 or to imprisonment for a term not exceeding two years.”

“Every corporation convicted for contravening the Act is liable to a maximum fine of $250,000.”


5 - “is that legal”, the Free Online Legal Guides to Ontario and Canadian Law

http://www.isthatlegal.ca/index.php?nam ... aw_ontario

- A good overview of the laws, with quotes and references to the two Acts.
- Useful quotes:

“…there is an 'implied condition of merchantability' (freedom from defects) … [SGA s.15].”

“Any attempt by a supplier … to avoid or vary the above-noted (SGA and CPA) statutory warranties or conditions with respect to consumer transactions, is void [CPA s.9(3)]”

“You cannot give these rights up, even if you want to.”

http://www.isthatlegal.ca/index.php?nam ... +DWKaHHQ==

“On supplier default of most of these CPA rights the CPA grants the consumer the right to cancel the consumer agreement at the consumer's election, carried out by the delivery of a Notice of Cancellation to the supplier."

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DavidLeR wrote:
Feb 2nd, 2011 9:28 am
If people seem interested, I can also post links to the laws themselves, quoting the relevant sections.
Good to see the amount of work you went to, but I think it would have made far more sense to quote the law itself, rather than just the opinions of a third party. Those opinions certainly help, but nothing beats the actual law itself, so people know exactly what their rights are and understand the obligations of both the retailer and the consumer.
Member
Mar 7, 2010
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Great research, but I've never had any problems returning or exchanging a "defective" item with any stores.

I personally think if they offer you another package of the same product that is fair enough (as duds can happen in the manufacturing process, its not the stores fault for a dud from the manufacturer) if however the second item is also a dud, i think money back is due.

What I have a problem with are people who abuse this.

People who buy an item and return it saying its defective (when it isnt) becuase they were either done with the product or just decided they didnt want it.
Or people who misuse an item and try to return it defective after they physically broke the item.
Or people who return an item after 2 or 3 months saying its defective. (especially when they say it was defective since day 1, why wait 3 months later to return it?)



I think alot of stories of stores not taking back a "defective" product stem from people trying to abuse the system. (not all, but most)

Just my opinion.
[OP]
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iamnotamerican.com and Mysticdragon:

Thanks for the feedback.

I was inspired by cases where an item is DOA, and the customer realizes that all similar items are likely to be "duds", too, so no replacement is wanted.

Or, cases where the DOA item is expensive, and the customer loses faith that the retailer and/or manufacturer will stand behind it in the future.

There is also the case of Canadian Tire, whose official policy is that they never have to offer a refund for a defective item. CT seems to believe that it is entirely up to them to decide if a refund will be given.

Certainly there are cases of abuse on the part of a customer, and retailers have the right to protect their interests.

However, my focus is on mis-treated customers, and the ways some retailers attempt to systematically deny customers their rights.

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Dec 25, 2010
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Good thread.

I've been wondering lately if there are any kind of guidelines covering "defective" apparel items? I got a nice pair of leather gloves for Christmas, and earlier this weak the leather tore a little bit near the snap. Now the snap ring will slide out of the glove and I've almost lost it a couple times. I swear I haven't subjected the gloves to any abuse and I haven't been excessively hard on the snaps. I would definitely accept just exchanging them for new gloves and hoping they don't tear the same way.

I know retailers expect apparel exchanges/returns to be unworn with tags, but what protection do we have against items that barely survive three weeks of normal use?
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Nov 26, 2005
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nice research
hope someone from BC have time to do it
[OP]
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Below are links to the Ontario Sale of Good Act, and to the Consumer Protection Act.

I've added some excerpts from them which spell out the refund for defective goods, and describe customer requests for a credit card charge-back.

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Sale of Goods Act, R.S.O. 1990

The SGA can be found here: "Ontario - Sale of Goods Act : http://www.e-laws.gov.on.ca/html/statut ... 0s01_e.htm"

Allow me to draw your attention to this excerpt:

[INDENT]PART I - FORMATION OF THE CONTRACT

Implied conditions as to quality or fitness

15. 2. Where goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not), there is an implied condition that the goods will be of merchantable quality ....[/INDENT]
-----

Now, to the CPA: "Consumer Protection Act, 2002, S.O. 2002, c. 30, Sched. A"

[INDENT]Consumer Protection Act, 2002

PART I - INTERPRETATION AND APPLICATION

Interpretation

1. In this Act …

consumer” means an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes;

supplier” means a person who is in the business of selling, leasing or trading in goods …

consumer agreement” means an agreement between a supplier and a consumer in which the supplier agrees to supply goods or services for payment; [/INDENT]

I found 2 two situations where a refund must be provided:

1 – Under Part II, “CONSUMER RIGHTS AND WARRANTIES”
2 - Under Part III, “Unfair Practices”.

However, Part III isn’t as clear about mandatory refunds, since it simply says, “any remedy that is available in law, including damages”.

Therefore, I have chosen to focus on this Part:

[INDENT]PART II - CONSUMER RIGHTS AND WARRANTIES

Quality of goods

9. (2) The implied conditions and warranties applying to the sale of goods by virtue of the Sale of Goods Act are deemed to apply with necessary modifications to goods that are … supplied under a consumer agreement.

9. (3) Any term or acknowledgement, whether part of the consumer agreement or not, that purports to negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under this Act is void.

PART IX - PROCEDURES FOR CONSUMER REMEDIES

Form of consumer notice

92. (1) If this Act requires a consumer to give notice to a supplier to request a remedy, the consumer may do so by giving notice in accordance with this section.

(2) The notice may be expressed in any way, as long as it indicates the intention of the consumer to seek the remedy being requested and complies with any requirements that may be prescribed.

Consumer agreements not binding
93. (1) A consumer agreement is not binding on the consumer unless the agreement is made in accordance with this Act and the regulations.

Cancellation
94. (1) If a consumer has a right to cancel a consumer agreement under this Act, the consumer may cancel the agreement by giving notice in accordance with section 92.

Obligations on cancellation
96. (1) If a consumer cancels a consumer agreement, the supplier shall, in accordance with the prescribed requirements,
(a) refund to the consumer any payment made under the agreement or any related agreement.

Consumer’s recourse re: credit card charges

99. (1) A consumer who has charged to a credit card account all or any part of a payment described in subsection (2) may request the credit card issuer to cancel or reverse the credit card charge and any associated interest or other charges.

Timing of request
(3) A consumer may make a request under subsection (1) if the consumer has cancelled a consumer agreement or demanded a refund in accordance with this Act, and the supplier has not refunded all of the payment within the required period.

Obligations of credit card issuer

(5) The credit card issuer,
(a) shall, within the prescribed period, acknowledge the consumer’s request; and
(b) if the request meets the requirements of subsection (4), shall, within the prescribed period,
(i) cancel or reverse the credit card charge and any associated interest or other charges, or
(ii) after having conducted an investigation, send a written notice to the consumer explaining the reasons why the credit card issuer is of the opinion that the consumer is not entitled to cancel the consumer agreement or to demand a refund under this Act.[/QUOTE][/INDENT]

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D_J_M wrote:
Feb 2nd, 2011 7:34 pm
I know retailers expect apparel exchanges/returns to be unworn with tags, but what protection do we have against items that barely survive three weeks of normal use?
Not all retailers. A couple of first-hand examples:

1. I brought a several year old down parka back to Eddie Bauer at Yonge and Bloor for them to repair a torn internal seam. Naturally I had no receipt or tags. I was quite willing to pay them for the cost of repairs and told them so. They immediately, without hesitation offered to either give me a new parka or refund my money. Now that was some years ago. The policy may have changed.

2. I bought a pair of jeans at a suburban Toronto Eddie Bauer. After a month or so the zipper broke. The jeans didn't fit me all that well either so this time when I returned them I really wanted a refund rather than a replacement. This time I got a bit of resistance. After all they had the identical pair in stock. I firmly said no and they gave me a refund.

3. A couple of years ago I was standing in the checkout queue at an LL Bean outlet store in North Conway, NH. The chap ahead of me pulled out a pair of old, well-worn boots from a shopping bag. He told the clerk that he wasn't satisfied with how long they'd lasted. The sales lady remarked that the boots looked like they'd had a lot of use but, if he insisted, she'd refund his money. He insisted and she did.
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NG wrote:
Feb 27th, 2011 2:12 am
So Dollarama is just flouting the law with all those "no refund, no exchange" signs?
Pretty much, yes. If the item is defective or otherwise not suitable for the intended purpose, they are legally obliged to resolve the situation somehow.
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NG wrote:
Feb 27th, 2011 2:12 am
So Dollarama is just flouting the law with all those "no refund, no exchange" signs?
They're flouting the law only if they strictly enforce such a policy when a customer tries to return a defective item. In my experience such signs are really intended to discourage returns. Most people take written notices as gospel. And besides they're usually not going to make a huge fuss over a $1 or $2 item that turned out to be defective.

I wonder how a Dollarama store would react if I bought an item, opened it in the store just after paying for it, and discovered that it didn't do what it was supposed to. Do you really think the store would say, "Too bad, so sad" and point to the sign at the cash?

Another example is signs like this one that are commonly seen in paid parking lots.

Image

These signs are intended to discourage people from holding parking lot management responsible for damage or theft. When the customer complains that their car was damaged or broken into, etc., the lot attendant can just point to the sign and tell the customer there's nothing he can do. Most people buy that argument because it's a printed sign, it was put up my "management" and was there in plain view.

Yet courts have held that parking lot management has a duty to exercise reasonable care to ensure that the vehicles parked on their premises aren't damaged or broken into. This is particularly true with valet parking as opposed to self-parking because when you give the attendant your keys he assumes temporary custody of and liability for your vehicle. But even in self-parking lots, management is required to exercise reasonable care to supervise the lot, e.g. using CCTV, fencing, lighting, etc.
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If a store states in it's policies, or terms of sale, that no refunds will be given under certain/any circumstances and the consumer still makes the purchase, then in my opinion the customer is entering into a contract to buy and agreeing to the terms. Going against the contract and demanding a refund means the buyer is in breach, and therefore the store doesn't have to grant a refund. What do you think?

If you buy a car that's defective a few months down the road, I doubt the dealership will give you any refund.
[OP]
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dailce wrote:
Mar 9th, 2011 9:13 pm
If a store states in it's policies, or terms of sale, that no refunds will be given under certain/any circumstances and the consumer still makes the purchase, then in my opinion the customer is entering into a contract to buy and agreeing to the terms. Going against the contract and demanding a refund means the buyer is in breach, and therefore the store doesn't have to grant a refund. What do you think?

If you buy a car that's defective a few months down the road, I doubt the dealership will give you any refund.

dailce:

An interesting question. I started the following thread to get some input:

http://forums.redflagdeals.com/do-store ... s-1008320/

It's clear that a contract is formed for the purchase of the goods. What's not completely clear is whether a store policy becomes terms of that contract.

The main thing is that the consumer protection act says that the requirements of the Act can't be negated by some other agreement, such as a store policy.

A contract is not valid if it contains terms that are contrary to any law, so a contract term can't be "we don't have to give a refund for a defective product", because the law says they have to.

There are lots of other reasons to think the store policy does not get included in the contract. In particular, I don't think there's 'acceptance' if the purchaser doesn't even know what the terms are ahead of time. The policy can be different for each store, and for each item in the store.

Besides, I don't think the stores would want it to be an enforcable contract, because then they'd be on the hook to follow all of their policies all the time, but which then generally don't want to do.

You mentioned breach of contract. This can work against the retailer, too. If the contract said, "We'll give you a refund if you return it within 90 days", and then they refuse to give the refund, the store has breached the contract. And then they have to give you your money back!

In the case of an automobile, I don't think you could point to a burned out light bulb, and demand a refund on the car on that basis. The other extreme would be a car that does not even run. It would not be of "merchantable quality", so you might have an argument for a refund. But expect a fight from the seller, and to settle on a suitable repair.

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Great thread! Thanks OP - this should clear much misinformation and shady practices of some retailers!
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DLFB wrote:
Mar 12th, 2011 1:11 am
Admittedly, I'm too lazy to read all of this...I do have a question though:
Thank you for your honesty ;)
When a customer purchases a product at a store and the product doesn't work, is the store still OBLIGATED to exchange a product even though it CLEARLY states on the receipt/store that you must HAVE a receipt in order to get an exchange/refund?
Without a receipt how does the store know:
- that you bought the item from them? (unless it's a house brand like Mastercraft at CanTire)
- when you bought it? (perhaps their policy is to do no-questions-asked exchanges within 30 days, then send you to the manufacturer afterwards)
- that you actually bought and paid for it? (as opposed to shoplifted it)
- how much you paid for it? (maybe you bought it on sale and now you want a refund for regular price)

In short, without a receipt you're at the mercy of the store's management. If they let you exchange it without a receipt then consider yourself lucky. If they don't, don't complain about it here.
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