The Quebec government is cracking down on cellphone companies as part of a precedent-setting consumer protection bill that restricts the automatic renewal of contracts and limits penalties against consumers for rescinding an agreement.
Other provisions in the legislation tabled Tuesday prohibit expiry dates on prepaid calling cards and require merchants to disclose all details on additional protection offered by extended warranties.
Quebec becomes the first jurisdiction in the country to set tough standards on cellphone contracts which, according to the consumer protection group Option consommateurs, has become the single most important consumer irritant, representing 12 per cent of complaints.
In recent months, consumers increasingly complained about being charged for services such as text messages they never wanted. Teenagers and young adults, in particular, were often lured into a contract with the offer of a “free” phone only to learn that they couldn't cancel the agreement without paying a hefty penalty.
“The contract lasts three years. They are automatically renewed for another three years and if you try to pull out of that contract there's very, very onerous penalty fees that go beyond the value that you received when you entered into that contract,” Justice Minister Kathleen Weil said in a news conference Tuesday.
Companies will be required to inform consumers of all changes to a contract and will be prohibited from increasing charges without the consumer's consent. They will be required to give between 30 and 60 days notice before making changes. The provisions in the legislation target not only cellphone companies, but other industries such as internet providers.
“Finally we have it. It's been a long process but we finally got it done,” said Michel Arnold, president of Option consommateurs. “We will support this bill whole-heartedly but we expect a major battle from cellphone companies. It's not over yet.”
The consumer protection group also applauded provisions in the bill that will require companies to include all costs in the price advertised for their product. Car companies will be required to include accessory costs such as transportation fees in the price being advertised. Cellphone companies will need to include the cost of all services in the final price.
The bill would also authorize the government to set up funds in various sectors of commercial activity to compensate consumers for damages. Ms. Weil said both consumers and merchants could be required to pay into the fund.
Bernard Lord, head of the Canadian Wireless Telecommunications Association, said the legislation will be carefully examined before a decision is made whether to challenge any of the provisions if they are made law later this year.
Mr. Lord explained that association members have begun making many of the changes proposed in the bill, adding that companies recently adopted a code of conduct that will be implemented on Sept. 1. All complaints will be dealt with by the commissioner of complaints for telecommunication services.
“A lot of these things are being dealt with. One of the concerns we have is that we want to make sure that with these additional rules and obligations that the province of Quebec wants to impose that we don't end up with a situation where Quebec consumers actually pay more,” Mr. Lord said in an interview yesterday. “There may be additional costs associated with doing this.”
A Quebec Superior Court ruling last week confirmed a province's right to intervene in matters of contractual relations involving consumer protection.
“We are on very firm ground to legislate in this area because we are talking about contractual law,” Ms. Weil said.
