Le régime de protection du consommateur du Canada n’a pas su évoluer. Il doit être réorienté afin de tenir compte des tendances et des nouvelles menaces.
Up until the rise of the Internet and digital technology, consumers were, as Daniel Defoe noted in The Complete English Tradesman (1726), “the last article” or “utmost end” in a trade chain. As buyers of goods and services, consumers were passive actors in the market economy. Starting in 1970s, the regulation of consumer rights (through consumer protection legislation) was framed around this paradigm of consumers as passive actors and focused largely on product safety and warranties. But digital technology and the globalized networked information economy have fundamentally changed the very concept of a consumer. Consumers’ place in the market economy, the market dynamic, and the relationship between consumers and other actors such as business and governments, have also changed.
Canada’s current consumer protection framework does not respond to the realities of today’s marketplace. The tectonic shift in the marketplace requires a corresponding shift in how and why we regulate consumer rights. The regulatory shift must account for the power dynamic of the modern marketplace, which is, on the one side, dominated by a few (often oligopolistic) national and multinational market players, and on the other, populated by millions of similarly situated, diffuse, and diverse consumers who lack the knowledge, resources, and motivation to challenge unfair business practices that affect their daily lives.
Citizens as consumers first
By using goods and services, consumers still play the role of passive actors in the market economy. However, that role has fundamentally changed. In today’s society, not only does our purchasing behaviour make us consumers, but virtually all aspects of our daily lives and social interactions are made possible by, and conditional on, being consumers first.
In order to be producers, creators, learners, critical thinkers and citizens, we must be consumers first and click on or sign lengthy standard-form contracts before getting access to goods and services. When they purchase farm equipment, farmers are being consumers first. When they read digital books, stream documentaries or submit assignments through learning management systems, students are being consumers first. When we use our phones, the Internet, messaging apps or social media to communicate with friends and family, we are all being consumers first. The list of interactions that are premised on being consumers first goes on and on.
At the same time, because we are consumers first, our lives are becoming increasingly digital and connected. We are creating an elaborate digital footprint and transmitting information about ourselves and all aspects of our lives. This information about ourselves as consumers first has become commodified and is routinely traded — by ourselves in exchange for “free” services, and by others, often without our consent or control.
Fundamental changes to the marketplace
The marketplace itself has also fundamentally changed. It is dominated by large national and multinational corporations, whose businesses cross many sectors and are — perhaps more importantly — often based on trading commodified data. The relationship between businesses and individuals —consumers — in a globalized, mass-market, digital economy, is interconnected, multifaceted, varied and dynamic. That relationship is also almost exclusively based on and subject to nonnegotiable standard-form contracts that are presented to consumers on a take-it-or-leave-it basis. As consumers first, we have become “contract takers.” Our access to and use of goods and services is conditional upon accepting the terms of these contracts.
Standard-form contracts are extremely long. People generally do not read these contracts, not only because they are written in complicated legalese, but also because it would take an inordinate amount of time. These pervasive and far-reaching contracts are frequently unfair to consumers. They unduly restrict consumer rights, including the very right to access the courts in order to challenge those contracts.
As consumers first, we have become “contract takers.” Our access to and use of goods and services is conditional upon us accepting the terms of these contracts.
Is your telecommunications service provider allowed to read your e-mail? What are the limits of your liability if you post an online review? What can you do if your e-reader deletes the book you were reading for your homework? What happens if you hack your smart-tractor to repair it yourself? The legal and regulatory framework of modern-day consumer-business relationships is a highly fragmented, complex maze, and finding answers to such common questions is not that easy. The issues that affect us all, as consumers first, cut across numerous subjects and industries. They are also complicated by jurisdictional complexities both within Canada (the various federal/provincial-territorial powers under the Canadian constitutional framework) and, increasingly, across national borders.
And yet, provincial and territorial consumer protection legislation mostly situates consumers as passive actors. It does provide some important protection; for example, it prohibits the waiving of rights covered by legislation, preserves access to courts, and regulates unfair business practices. However, the scope of this legislation is too narrow, and it is generally not suitable in the context of consumer issues today.
The consumer protection legislation applies only to consumer-business relationships in which goods and services are acquired “for personal, family or household purposes.” It does not apply “for business purposes.” Therefore, the protections do not extend to “prosumers” — consumers who are also producers. Prosumers can be hobbyists who sell their work on Etsy, or homeowners who rent out rooms on Airbnb, whether it is to make a living or to make a few extra dollars.
The legislation is also not addressing the growing number of people who work from home, using products they purchase both for personal use and work. And, because the laws apply only to transactions of $50 or more, the protections do not extend to any of the “free” services consumers frequently use, such as Facebook or Gmail. More importantly, many issues that affect today’s consumers — personal and data privacy, data sharing, intellectual property, freedom of expression, criticism, affordability, the desire for a clean environment and competition, to name some — are regulated in separate regulatory frameworks and are not part of the consumer protection legislation. This has led to a patchwork of distinct, disconnected, often uneven rights.
Consumer issues, in all their pervasiveness and complexity, are at the forefront of our lives, yet they linger at the bottom of the policy agenda.
Consumer issues, in all their pervasiveness and complexity, are at the forefront of our lives, yet they linger at the bottom of the policy agenda. We need to move away from regulating consumer rights haphazardly and reactively, following a data breach, an investigative journalism scoop or social media backlash. We must instead adopt a proactive and systematic approach to consumer rights and move them to the top of the policy and research agendas.
The solutions will need to involve recalibrating the regulatory ecosystem and redefining consumer rights. This won’t be easy (because of jurisdictional complexities), quick (because of the multiple national and international stakeholders implicated), or simple (because of the sheer number of issues).
Recalibrating the regulatory ecosystem
The current regulatory framework of consumer rights is based on the paradigm of the consumer as the “last article” in the trade chain. Businesses have the capacity and resources to comprehensively participate in regulatory and policy-making, including numerous consultations and extensive lobbying activities. However, consumers do not have this capacity, because the structure of the regulatory and policy-making institutions and processes does not easily or comprehensively foster consumer participation or account for consumers’ interests.
As well, consumers’ interests are neither as organized nor as well resourced as business interests. As a result, there is a heightened risk that the resulting regulation and polices predominantly respond to, or are captured by, business interests. The regulatory ecosystem must be recalibrated to better reflect the dynamics of consumer-business relationships. This can be accomplished by introducing an agency that is solely focused on consumer protection, engaging consumers in policy-making, strengthening civil society, and increasing the quantity of independent research.
An agency dedicated to consumer protection
Although consumers are integral actors in the modern-day marketplace, their interests are distinct and inherently in tension with business interests. Keeping business and consumers under one governmental umbrella is untenable.
At the federal level, it’s time to reintroduce a federal ministry exclusively dedicated to consumer affairs. The separation of consumers’ and business interests should also occur at the provincial level. Between 1967 and 1995, Canada had a minister of consumer and corporate affairs, whose mandate included consumer issues. The name of the ministry and its mandate were premised on that historical paradigm of the consumer as a passive actor in the marketplace. The consumer part of the mandate was dropped from the name (and largely from the mandate) in 1995. The current iteration of the ministry —Innovation, Sciences, and Economic Development — has a small Office of Consumer Affairs.
Civil society and community organizations
Consumers’ voices and diverse experiences are largely absent from policy-making. And, increasingly, businesses are using forum-selection clauses (which often require consumers to take their cases to other countries’ courts), arbitration clauses or class action waivers to curtail consumers’ ability to participate in class action lawsuits. These lawsuits are possibly the only way that consumers can meaningfully challenge unfair business practices.
In order to increase consumers’ knowledge and civic participation in the policy-making process, we need to ensure the financial sustainability of civil society and community organizations. These groups perform multiple roles — they represent and advocate for the interests of consumers and the public as a whole; they conduct much-needed research; and they provide education, information and referrals to individual consumers. While there is an urgent demand (and need) for civil society participation in policy-making, the lack of funding often challenges the ability of these organizations to meaningfully contribute.
Independent research is essential for evidence-based policy-making. Although in Canada there is research into various areas that affect consumers (notably data and information privacy), there is little being coherently conducted on this new paradigm of individuals as consumers first. Federal granting agencies, foundations, and associations should include consumer-oriented research as a priority area.
Redefining consumer rights
The consumer rights framework should be redefined, with the help of civil society. The framework should reflect the new complexities in consumer-business relationships and should restrict the reach of contracts.
The consumer rights framework
First, there is an urgent need to thoroughly map out and untangle the complicated maze of consumer relationships. This maze includes (general and issue-specific) federal and provincial/territorial legislation. Inconsistencies and conflicts should be identified and reconciled.
Second, provincial/territorial consumer protection legislation must be updated to reflect the changing nature of consumer relationships, with a view to developing a uniform (harmonized) approach to consumer protection across Canada. This work could be accomplished through the Uniform Law Conference of Canada or the Consumer Measures Committee, or both.
Lastly, given the growing cross-border dimension of consumer interactions, consumers’ interests should be represented and accounted for in their own right under bilateral and multilateral trade agreements (such as NAFTA and the CPTPP) and in relevant forums (such as OECD’s Committee on Consumer Policy and UNCTAD’s Intergovernmental Group of Experts on Consumer Protection Law and Policy).
Restricting the reach of contracts
Standard-form contracts have become the dominant regulatory mechanism of business-to-consumer relationships, and they often severely restrict consumer rights and protections. Their enforcement is, by and large, governed by rules that have developed over the years in the commercial world, in which the parties have (almost) equal information and bargaining powers and can negotiate contract terms and meaningfully consent to them. In the consumer-business relationship this equality does not exist; instead there is a considerable informational and power imbalance, and consumers lack meaningful consent.
While a landmark decision last year at the Supreme Court is a step in the right direction in limiting the reach of contractual restrictions, the enforceability of contractual restrictions is still determined on a case-by-case basis, which in neither optimal nor comprehensive. There is a pressing need for a complete reform of the law of contracts designed for consumer-business transactions.
The now famous remark by US President John F. Kennedy that “consumers, by definition, include us all” rings even more true today, when our daily lives and social interactions are conditional on being consumers first. The current consumer framework does not adequately address the ubiquity of the consumer-business relationship, nor does it provide meaningful protection of either individual consumers’ interests or the collective interests of consumers as a group.
Consumers’ rights are few and scattered across many areas of law (as well as federal and provincial/territorial jurisdictions), and they are often restricted by standard-form contracts. All of this further exacerbates the asymmetry between the information, power and resources of consumers and business, and the result is regulatory policies that are often more favorable to business than consumer interests.
A comprehensive report by the federal government systematically canvassing the issues and regulatory approaches would be an important first step to address the gaps for Canadian consumers. The Standing Committee on Industry, Science, and Technology could carry out the work federally. Provincially, this kind of work would fit well within the mandates of law (reform) commissions, or even in a collaboration among several provincial law reform commissions (with the assistance of some federal funding). Canada’s consumer rights framework is well overdue for a comprehensive reform.
This article is part of the Recalibrating Canada’s Consumer Rights Regime special feature.
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