May 16, 2011
Cell Phone Contracts Must be Fair
– – –Province to Target Excessive Cancellation Fees, Unilateral Contract Changes, Unclear and Hidden Terms
Fair and clear cell phone and texting contracts would be required under new rules as part of the province’s Let’s Make a Better Deal strategy, Family Services and Consumer Affairs Minister Gord Mackintosh announced today.
“Manitobans have told us they are frustrated by high cancellation fees, unilateral changes to contract terms and prices, hidden charges and complex and unclear contracts,” said Mackintosh. “They have asked for greater fairness and the ability to make informed choices and this legislation will make that happen.”
The new rules would include the following seven protections:
- allow cell phone customers to cancel contracts before the end of term;
- prohibit unreasonable cancellation fees, while allowing cost recovery for equipment provided or subsidized as a contract incentive;
- stop charges for service that can’t be accessed due to damaged or defective equipment, unless the customer is responsible;
- end unilateral amendments to a material element of a contract if the change doesn’t benefit the customer;
- require the minimum monthly cost to be included in advertisements;
- require companies to fully disclose and explain all charges and terms; and
- limit automatic contract renewals.
The proposed new rules are based on about 250 consumer and industry responses to a discussion paper released earlier this year, as well as consultation with Quebec, the only other province with similar legislation.
One Manitoban who participated in the consultation said, “We have a huge concern with the one‑sidedness of the contracts. Not long after we signed the contract, the company sent a letter stating that they were no longer offering the package with unlimited texting to the States. I told them that was the only reason why we had signed with them in the first place and so would cancel the contract. I was informed that they reserved the right to change contracts and plans at any time and I would be charged a large fine. I find this a huge injustice.”
The new legislation would prohibit unilateral amendments to material provisions in the contract (such as service or cost), unless the change clearly benefits the consumer.
“Busy Manitoba families are too often shocked by the fees on their cell phone bill, as they were not clearly articulated in the contract,” said Gloria Desorcy, executive director of the Consumers` Association of Canada (Manitoba). “We are pleased these changes will help ensure contracts are fair and consumers are protected, while also supporting competition in the cell phone industry."
The new rules would come into force in 2012. The Consumer Protection Office would monitor industry practices to ensure compliance. Failure to comply with the rules could result in financial penalties ranging from $1,000 to $5,000 per breach. Businesses could also be charged with an offence under the Consumer Protection Act and its regulations and be subject to fines up to a maximum of $300,000.
More information on Let’s Make a Better Deal is available at www.gov.mb.ca/fs/cca/cpo/deal.html.
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BACKGROUND INFORMATION ATTACHED
Backgrounder
Cell Phone Contract Cancellation Fees - https://www.gov.mb.ca/asset_library/en/newslinks/2011/05/Cellphone_Contracts_Bkgr.doc