Proposed Consumer Protection Act introduced in New Brunswick: key provisions and provincial comparisons

On November 22, 2023, New Brunswick’s Minister of Finance and Treasury Board introduced Bill 16, a proposed Consumer Protection Act (the NB CPA). The Bill passed a second reading on November 24, 2023.

What you need to know

• The draft NB CPA set out in Bill 16 consolidates and updates existing regulatory areas overseen by the New Brunswick Financial and Consumer Services Commission (FCNB): gift cards, direct sellers, cost of credit disclosure, credit reporting services, collection and debt settlement and payday loans.
• The NB CPA also introduces six new categories of consumer protection requirements under a single piece of legislation, specifically, requirements respecting unfair practices, internet sales contracts, future performance contracts, high-cost credit, unsolicited goods or services, and personal development services contracts.
• The coming into force of the proposed NB CPA would advance a key priority area for the FCNB and more closely align the New Brunswick consumer protection legislation with that of certain other common law provinces, including Ontario.

What legislation is already in place?

At present, New Brunswick does not have an overarching Consumer Protection Act. Instead, consumer protection in the province is governed by a patchwork of related legislation, such as the Cost of Credit Disclosure and Payday Loans Act, the Credit Reporting Services Act, the Direct Sellers Act, and the Gift Cards Act. Under the existing framework, each piece of legislation covers a separate area of consumer protection law. Bill 16 repeals these Acts and consolidates the relevant provisions in the NB CPA, with transitional measures to ensure a smooth changeover. The NB CPA also introduces new requirements generally applicable to consumer agreements, including those that may apply to agreements made outside of the context of consumer credit and direct sales.

What is being proposed?

According to the FCNB, the goal of the NB CPA is to protect three basic consumer rights: the right to be properly informed about products and transactions, the right to be safe from unfair business practices, and the right to seek remediation when businesses do not comply by providing consumers with remedies and protections.

In terms of structure, the proposed NB CPA is divided into the following categories: unfair practices, unsolicited goods or services, consumer agreements, direct selling, cost of credit disclosure, high-cost credit products, and payday loans, most closely mirroring the categories in British Columbia’s Business Practices and Consumer Protection Act.

Industry participants will have to wait for the release of the regulations under the NB CPA for a full understanding of new consumer protection requirements in the province. However, we touch on five key areas in the proposed NB CPA below: unfair business practices, high-cost credit products, unsolicited goods and services, internet and distance sales agreements and rewards points agreements. Lastly, we discuss administrative penalties under the new proposed regime.

1. Unfair business practices

The proposed NB CPA introduces new prohibitions against unfair practices by setting out a long list of practices in which suppliers are prohibited from engaging, including, among other things, exerting undue pressure on a consumer to enter into a contract, taking advantage of a consumer’s inability to understand the character of a consumer transaction, and charging a price for goods or services that grossly exceeds the price at which similar goods or services are readily available without informing a consumer of the difference in price. The NB CPA also sets out as an unfair practice a supplier’s doing or saying anything that might deceive or mislead a consumer. The categories of unfair practices in the proposed NB CPA are broadly similar to the list of unconscionable representations and acts in Ontario’s proposed Consumer Protection Act, 2023 under Bill 142 (New Ontario CPA), which we covered in a previous bulletin. The proposed legislation clarifies that an unfair practice may occur whether or not a consumer agreement is entered into.

Under the proposed NB CPA, a consumer may cancel, at no cost or penalty, an agreement that was entered into by the consumer and a supplier who engaged in an unfair practice, whether the unfair practice occurred before or at the time the consumer agreement was entered into or afterwards.

The NB CPA also sets out detailed requirements for advertising. For example, the NB CPA prohibits any person from making any false, misleading or deceptive statements in any advertisement used in respect of a regulated activity. In the event of a breach, the FCNB’s Director of Consumer Affairs may order the immediate cessation of any offending advertisement.

Unfair practices and misleading advertising prohibitions have the broadest application of any of the consumer protection requirements, and consideration of these provisions should be a key priority for any type of business.

2. High-cost credit products

The NB CPA proposes to introduce a high-cost credit regime that would bring New Brunswick in line with British Columbia, Alberta, Manitoba, Quebec, and Newfoundland—each of which has legislation addressing high-cost credit products. We note that Ontario does not currently have a comprehensive high-cost credit legislative regime, but the Government of Ontario has taken steps toward the implementation of such a regime, with a 2021 consultation paper on high-cost credit and alternative financial services.

The NB regime would apply to a high-cost credit product (i) provided by a high-cost credit grantor that carries on business in New Brunswick, (ii) provided to a borrower who is resident in New Brunswick, or (iii) in which the offer or acceptance is made in or sent from within New Brunswick. The high-cost credit threshold will be addressed in forthcoming regulations, but we expect it to align with the other common law provinces, at approximately 32% per annum. Carveouts are proposed for agreements in relation to the extension of less than $100 of credit, a credit agreement in relation to a payday loan, and a financial product or service regulated under the Loan and Trust Companies Act or the Credit Unions Act.

Like other provinces with high-cost credit legislation, the NB CPA requires high-cost credit lenders to be licensed. Lenders will also need to include certain information in writing in high-cost credit agreements, including in an initial disclosure statement, and to provide a copy of the contract to consumers. High-cost credit agreements must also provide for certain cancellation rights. In particular, a borrower will be permitted to cancel a high-cost credit agreement within 48 hours, excluding Sundays and other holidays, after receiving the first advance or a cash card enabling the borrower to access funds under the agreement. A similar cancellation right is provided for payday loans.

Certain practices would be prohibited pursuant to a high-cost credit agreement, such as the collection of a payment before its due date. High-cost credit lenders would be prohibited from engaging in tied selling—specifically, they would not be able to make a high-cost credit product contingent on the purchase of insurance or other goods or services.

3. Unsolicited goods and services

The proposed legislation includes provisions respecting unsolicited goods and services in line with several other common law provinces. They provide that a consumer would not be liable to pay for, or have any legal obligations in respect of, unsolicited goods or services, unless the consumer expressly acknowledges the intention to accept the goods or services in writing. “Unsolicited goods or services” includes enhancements to a service already being received. The proposed provisions also provide that a material change in the goods or services subject to an ongoing consumer transaction would deem the goods or services to be unsolicited unless the supplier is able to establish the consumer’s consent to a material change. A breach of these provisions would entitle a consumer to demand a refund for amounts paid. “Material change” is defined as “a change or a series of changes of a nature or quality that could reasonably be expected to influence a reasonable person’s decision to enter into a consumer agreement or continue a consumer transaction”.

The addition of unsolicited goods provisions, and the potential impact of a “material change”, are important to consider for any supplier of ongoing goods and services to a person in the province or a supplier that carries on business in the province, including providers of goods subject to a subscription service, and financial institutions in their provision of financial products.

4. Internet and distance sales agreements

The NB CPA proposes to create obligations respecting certain types of consumer agreements, including distance agreements, future performance agreements, personal development service contracts and agreements respecting rewards points. These categories are similar to those found under the Ontario Consumer Protection Act, 2002 (Existing Ontario CPA), which will be amended by the New Ontario CPA once in force. However, unlike the New Ontario CPA, which streamlines contractual disclosure requirements to establish general requirements applicable to many types of contracts, the NB CPA primarily divides requirements by category. The applicability of requirements to certain agreements, including internet sales agreements and distance sales agreements, will be subject to a de minimis threshold to be set out in the regulations.

With respect to distance and internet sales agreements, provisions in the NB CPA aim to harmonize laws in New Brunswick with existing consumer protection provisions in other provinces. Provisions under the NB CPA apply to distance sales contracts or internet sales agreements that are entered into, amended or renewed where the supplier or consumer is a resident of or located in New Brunswick, or where the offer or acceptance is sent from within New Brunswick. The provisions do not, however, apply to goods or services that are immediately downloaded or accessed using the Internet. This suggests that the FCNB may take the position that the mere offering of a website or downloadable tool to residents of New Brunswick should not subject a supplier to disclosure requirements applicable to internet sales contracts.

Before entering into a distance or internet sales agreement with a consumer, a supplier will be required to disclose certain information, which will be prescribed by forthcoming regulations. The provisions will also give consumers the right to cancel a distance sales contract or internet sales agreement at any time before accepting the delivery of the goods or the supply of services if the supplier fails to deliver the goods within 30 days after the delivery date specified in the contract or an amended delivery date, or the date the contract is entered into if a delivery date is not specified.

If a distance sales contract or internet sales contract is cancelled pursuant to the NB CPA, the supplier will be required to refund to the consumer all money paid within 15 days after the date of cancellation. Mirroring similar provisions in British Columbia, the NB CPA’s provisions governing internet sales agreements will also apply to contracts for the supply of goods and services that are not entered into in person.

5. Rewards points agreements

The draft legislation proposes to regulate rewards points agreements, which are currently regulated only in Ontario and Quebec. These requirements will apply only to agreements that provide for the exchange of rewards points for goods or services with a value above an amount prescribed by regulation (thereby exempting agreements for rewards points below such de minimis threshold), and additional exemptions may be set out in the forthcoming regulations.

Suppliers of rewards points will be required to provide prescribed disclosures to customers (to be set out in the regulations) and will be permitted to unilaterally amend rewards points agreements if such ability to amend is disclosed in the agreement and notice of amendment is provided in accordance with the relevant provisions of the NB CPA. Expiry of rewards points based on the passage of time alone will be prohibited unless permitted by regulations, but expiry for other reasons may be permitted if provided for in the agreement. A supplier of rewards points will also be prohibited from expiring rewards points following the conversion of such rewards points into another unit of exchange unless permitted by the regulations. Lastly, a rewards points agreement can be terminated by either the supplier or consumer if such right is provided for in the underlying agreement, and such termination can trigger expiry of the rewards points.

Administrative penalties

Existing consumer protection laws in New Brunswick already provide strong powers to government officers to enforce laws. For example, compliance officers are entitled to be appointed to ensure compliance with existing legislation like the Cost of Credit Disclosure and Payday Loans Act and Direct Sellers Act. The FCNB is also entitled to appoint administrative penalty officers, who may issue notices of administrative penalty. Under the proposed NB CPA, the FCNB continues to be entitled to appoint compliance officers, who may conduct compliance reviews to inspect records relating to a regulated business. The compliance review may occur within or outside New Brunswick.

Where a person has contravened or failed to comply with a provision of the NB CPA or its forthcoming regulations, that person may be subject to a fine of up to $10,000 for an individual or $25,000 for a person other than an individual.

Next steps

While Bill 16 has passed the second reading, rules and regulations under the proposed NB CPA are currently in the development process. Stakeholders will be invited to provide feedback once the rules and regulations have been finalized. It is also worth noting that the New Ontario CPA received royal assent on December 6 and will only come into force once the corresponding regulations have been approved; however, draft regulations have not yet been published.

The recent developments in modernizing and streamlining consumer protection legislation in Ontario and New Brunswick may signal a shift toward greater regulatory attention to consumer protection at the provincial level, and we may see other provinces follow suit—particularly those with more outdated or narrow consumer protection regimes.