Rules for businesses entering into contracts at a consumer’s home
What businesses that market products and services door-to-door or in a consumer’s home need to know about the Consumer Protection Act and how it applies to their business.
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Most businesses that market products and services door-to-door or in a consumer’s home are subject to rules under the Consumer Protection Act, 2002. On March 1, 2018, the rules for businesses that sell certain products and services door-to-door or at consumers’ homes changed under the Consumer Protection Act and its regulations.
Changes to rules for certain home service contracts
Certain products and services can no longer be offered or sold at a consumer’s home unless the consumer initiated the transaction (for example, the consumer called or emailed your business and asked you to come to their home to enter into a contract). There are some exceptions if you already have a contract in place with the consumer.
The restricted products and services are:
- air conditioners
- air cleaners
- air purifiers
- water heaters
- water treatment devices
- water purifiers
- water filters
- water softeners
- duct cleaning services
- any good or service that performs one or more of the functions listed above (for example, an HVAC system)
Repairs and maintenance
If you conduct repairs or maintenance at a consumer’s home, you cannot enter into a new agreement in relation to these products or services during your visit, unless you have an existing contract with the consumer, asked the consumer in advance if you could offer a new contract for these goods or services, and the consumer agreed. However, you can still leave marketing materials at the consumer’s home.
Exceptions for businesses with a contract in place
If you have a written contract in place with a consumer, you can contact the consumer by any means of communication, schedule a visit to the consumer’s home for any reason and enter into a new contract for one of the restricted products or services.
However, before you go to the consumer’s home, you must ask them if you may offer them a product or service while visiting their home and the consumer must agree to hear the offer.
Record-keeping rules for businesses
If a consumer signs a new contract for one of the restricted products or services in their home, you must create and maintain records for three years from the date the contract is entered into. These records must verify either that the consumer initiated the transaction or that you:
- did not initiate contact at the consumer’s home, and
- had an existing contract with the consumer and the consumer agreed you could solicit for one of the restricted products or services during your visit
It is up to you to determine how best to develop and maintain these records.
Mandatory cover page and disclosure requirements
All contracts for the restricted products and services must have a cover page on the contract which outlines consumer rights. This means you need to:
- print out and provide the cover page (PDF)
- have the consumer sign the cover page and the contract for the restricted product or service before any work begins
As of May 1, 2018, you must also make sure the language in your contracts meets new contract disclosure requirements, including requirements to clearly disclose overall costs and any cancellation fees. Before May 1, 2018, businesses must meet the existing contract disclosure requirements under the Consumer Protection Act, 2002 and its regulations.
10-day cooling-off period
If the consumer invites you to their home and signs a contract for a restricted product or service, the consumer will have a 10-day cooling-off period during which they can cancel the contract without reason or penalty.
The cooling-off period begins on the date the consumer receives a written copy of the agreement.
Changes to water heater regulations
After March 1, 2018, a number of rules on water heater suppliers are no longer required as unsolicited door-to-door water heater contracts will no longer be permitted. These changes include:
- The verification calls for supplier-initiated contracts are no longer required.
- The cooling-off period for water heater contracts is now 10 days, as with the other restricted products and services.
- Water heater suppliers are required to ensure they are providing the correct disclosures in consumer agreements and using the updated mandatory cover page instead of the specific cover pages previously required.
In addition, as of May 1, 2018, suppliers will be required to ensure they are providing new disclosures in consumer agreements.
If a consumer enters into a contract because of unsolicited door-to-door marketing or as a result of misleading marketing materials left at the consumer’s home, the contract will be void and the consumer will be able to keep these products or services without any obligation. If the consumer incurs charges related to the voided contract, such as to remove or return the product or service, the business must reimburse the consumer for these charges.
If you market any of the restricted products and services at consumers’ homes, you may be subject to inspections by the government.
Learn more about what to expect when you are being inspected in Ontario.
If you don’t follow the law
Businesses that engage in illegal door-to-door marketing for the restricted products and services, could be subject to other enforcement actions under the Consumer Protection Act, such as caution letters, compliance orders, charges and prosecutions in addition to consumers being able to keep goods without any obligation.