Amendments to Québec’s Consumer Protection Act including significant changes to loyalty programs and stronger financial consumer protections are set to come into force as of August 1, 2019.
Loyalty programs that offer consumers goods and services that have a retail value of more than $50 must comply with the following new provisions:
- To provide consumers with more information regarding expiry, receiving or exchanging points, conversion factors and terms.
- To not increase the number of points needed to get goods and services unless the increase is justified by the market value of the goods and services.
- To make changes to certain terms and conditions without the consumer’s consent only if the changes are identified and sent to the consumer 60 to 90 days before they come into effect and that the notice only provides information related to the changes, including the previous terms being changed (as a point of comparison).
- To make any changes to the number of loyalty points already accumulated by a consumer, or to modify the conversion ratio for previously accumulated points that would be to the detriment of the consumer is limited.
When outlining these change, the Consumer Protection Office included a reminder that loyalty program points collected by the consumer can no longer expire for “time alone” including any attempts to exchange the loyalty points into another form of points. There are conditions under which they can expire, such as inactivity for more than one year, but only if a notice of expiry is sent to the consumer 30 to 60 days in advance of the expiry date, and the notice must not be combined with any other program information nor combined with any promotional activity or activities.
High-cost credit contracts, minimum payments, consumer credit assessment and credit limits
Transparency is key as these new changes go into effect. Merchants, including financial institutions, must assess a consumer’s ability to repay credit prior to entering into a high-cost credit contract or approving credit limit increases. Merchants who enter into a high-cost credit contract will be required to provide consumers with written copies of the documents containing the consumer’s repayment assessment and their debt ratio.
Merchants and consumers should be aware that minimum payment requirements cannot be less than 5% of the oustanding balance at the end of a billing cycle and a person’s credit limit cannot be raised unless the merchant has first sent a notice to the person.
In cases where a merchant has not fulfilled its obligations, consumers now have tools at their disposal such as a 10-day grace period to cancel a high-cost credit contract or applying to have the contract annulled in cases where the permit requirement was not met by the merchant.
Certain contracts such as credit card application forms or leases must include new mandatory information including, but not limited to, disclosure requirements, compulsory clauses and specific information at the front-end of the contract provided to consumers from the applicable boxes noted in the Act.
Given the substantial fines for those who contravene the Act or its regulations, CMA members must review and update their policies and procedures.
The Consumer Protection Act includes provisions that expressly prohibit misleading or false advertising to consumers. Specifically, merchants may not make claims that credit may improve a consumer’s financial situation or solve a debt problems.
The regulatory landscape is constantly changing and staying up-to-date is important. If you are unsure of where to turn, the Canadian Marketing Association provides guidance and support to its members on a wide variety of issues. Check our site for resources and stay up to date by subscribing to our Top 5 Picks e-newsletter through MyCMA.
Author: Florentina Stancu-Soare | Senior Manager, Regulatory and Consumer Affairs @CMA
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