Consumers have been feeling the effects of door-to-door sales in the HVAC rental/financing industry. It has become a hot topic, which has received much attention in the media. What is the truth about these agreements and are they a raw deal for consumers?
Many consumers who have entered into rental contracts for HVAC equipment at the door, complain that they have been badly misled about the nature of their transaction. Many report that their contracts contain misleading information or that they do not show the fair market value of the equipment, the duration and true cost of the agreement, and the additional fees, liens or security registrations that apply, prior to signing the agreement. Consumers may find themselves caught in shockingly expensive lease agreements with massive markups over the reasonable fair market value of the equipment provided, only to find that they will never actually own the equipment and that a lien has been placed against their home by the seller or an affiliated company.
The Ontario government has begun to crack down against companies for alleged practices that are unfair to, and disadvantage oftentimes vulnerable consumers. The Canadian Competition Bureau has also issued a warning to consumers about deceptive sales pitches in the HVAC marketplace: http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04117.html.
What are your rights?
In Ontario, HVAC equipment contracts are governed by the Consumer Protection Act, 2002, SO 2002, c 30, Sch A (“Act”). That Act exists to specifically protect consumers from unfair and often unconscionable conduct by businesses. Below are some highlights of the protections afforded in the Act.
The Cooling-off Period (for purchases made at home valued $50 or more)
There is a mandatory 10 day “cooling-off period” during which a consumer can cancel a contract with a supplier after signing it for any reason, and a 20 day cooling-off period specifically for water heaters. The provincial government increased the cooling-off period for water heaters due to the increasing levels of consumer complaints about door-to-door water heater rental agreements.
Is there recourse for consumers once the cooling-off period has expired?
Yes! Among other rights and remedies, consumers should be aware of the following:
- Unfair Practices
- Sections 14 and 15 of the Act provide strong protections for consumers against misleading and unconscionable representations defined as “unfair practices”. These are statements of any kind which can mislead or prejudice the consumer.
- If there is an unfair practice by the seller in the course of making the agreement with the consumer, the agreement may be rescinded (cancelled), and the consumer may obtain any remedy that is available at law, including damages (money awarded for a loss).
- Disclosure Requirements
- The Act details a number of requirements for a number of specific types of consumer agreements. Those requirements must be met in order for the agreement to be binding. If the seller does not give the consumer all of the important information required by the Act, the agreement can be cancelled and other remedies can be ordered by the court. In the case of equipment leases, all of the details about the total cost of the lease, the fair market value of the equipment and all other material aspects of the deal are required.
- Class Actions
- Class actions are specifically enabled under the Act as an effective way to resolve disputes regarding consumer agreements.
- Class actions are cost effective for consumers because they create “strength in numbers” by bringing all of the consumer claims together to be resolved by the court in one big case that the defendant cannot ignore. One lead plaintiff can push the case forward for all similar consumers under a mandate granted by the court.
- Class actions are also cost effective for consumers because they don’t have to pay the class action lawyers out of pocket. Class action lawyers can be paid on a contingency fee basis (meaning they only get paid if they win and only from the money recovered in the case) in order to finance the litigation process.
Harrison Pensa LLP is counsel for the plaintiff in a pending class action matter filed against MDG Newmarket Inc. (“Ontario Energy Group”), Eugene Farber and Home Trust Company. The matter has not yet been certified and the allegations made have not yet been ruled on by the courts.
A CTV-W5 story on the HVAC door-to-door sales industry can be viewed here: http://www.ctvnews.ca/w5/w5-investigates-door-to-door-furnace-sales-schemes-that-victimize-canadians-1.3096100.