Understanding Ontario's Consumer Protection Act, 2023: What Businesses Need to Know

Ontario's Consumer Protection Act, 2023 received Royal Assent in December 2023 and will reshape how businesses handle consumer agreements, especially in the digital marketplace. While not yet in force, businesses should start preparing now.

Why the Changes Matter

The digital age exposed gaps in the current Consumer Protection Act, 2002. A 2024 Law Commission of Ontario report recommended reforms targeting online terms of service, emphasizing the need for better frameworks around online contracts and restrictions on unilateral changes to agreement terms.

The new CPA simplifies how consumer agreements work:

Before (Current CPA):

• Different types of agreements (internet, direct, future performance) each had their own specific disclosure requirements

• Complex to manage multiple agreement types

• Two separate sets of rules for amendments and renewals

After (New CPA):

• One unified set of core requirements for most written consumer agreements

• Internet agreements follow the same streamlined disclosure rules

• Single framework for contract amendments

• Easier compliance for businesses, especially those operating online

Contract Amendments: A Major Focus

Perhaps the most impactful change concerns how businesses can amend existing agreements. Currently, two separate sets of rules govern amendments, extensions, and renewals. The new CPA introduces a comprehensive framework that restricts suppliers from amending or continuing contracts except in accordance with regulations. Any non-compliant amendments or continuations will be void.

The government is currently consulting on proposals that would require businesses to obtain express consent from consumers for business-initiated changes. Alternatively, businesses might provide notice of changes and give consumers the right to terminate the agreement. This represents a substantial shift in how companies can update their terms of service.

Exemptions and Scope

Most existing exemptions will carry over to the new CPA, including transactions regulated under the Securities Act, certain financial services, and real property transactions. However, new exemptions are being added, notably for professional services provided by the University of Ottawa Heart Institute and federally regulated entities such as banks and telecommunications companies.

It's important to note that the CPA applies to any consumer transaction where either the consumer or the business is located in Ontario. A "consumer" is defined as an individual acting for personal, family, or household purposes—not business purposes. The threshold for regulation remains remarkably low at just fifty dollars.

Retroactive Application Concerns

One notable aspect generating discussion is the regulation-making power that could potentially modify rights, obligations, or interests acquired under consumer agreements entered into before the new CPA becomes law. The government has acknowledged the significance of this potential retroactive application and is seeking feedback to understand its impacts and risks.

What Businesses Should Do Now

With regulations still being finalized, now is the time to prepare. Here's your action checklist:

1. Identify your consumer agreements - Determine if you're selling goods or services to individuals for personal, family, or household use

2. Review your current terms - Make sure your existing terms of service and terms of use contain all required provisions under current regulations

3. Monitor the regulations - Stay informed as the government finalizes the specific requirements for amendments and consumer consent

4. Plan for updates - Develop a strategy for updating your terms once the new CPA is proclaimed in force

5. Consider the consent issue - Think about how you'll obtain express consent from consumers when making changes to agreements

6. Assess retroactive impacts - Evaluate how potential retroactive application might affect your existing customer agreements

Remember, the CPA applies if either you or your customer is in Ontario, and agreements as small as fifty dollars fall under regulation.

The Consumer Protection Act, 2023 represents a modernization of consumer protection for the digital age. While it introduces new compliance requirements, the unified approach should ultimately simplify how businesses manage consumer relationships in Ontario's evolving marketplace.