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Consumer Protection –
Consumer Protection Office |
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The laws apply to cell phone service contracts that are for personal, family or household purposes. They do not apply to business contracts.
The laws protect consumers who enter into both fixed-term and indeterminate (no-term) contracts. The laws do not apply to prepaid service plans or phone cards.
The laws cover contracts for cell phone services, not telecommunications equipment or systems. Cell phone services include voice and data plans (i.e. texting) and other communication services provided on a cell phone.
The laws come into effect on September 15, 2012.
The cell phone contract laws apply to contracts made on or after September 15, 2012. However, once your contract is extended or renewed, your contract will have to comply with the new consumer protection laws.
Under the new rules, cell phone companies have to follow a specific formula to calculate cancellation fees. Beyond the cancellation fees, the laws do not regulate what companies can charge for their services. The focus of these laws is on ensuring that companies provide clear and understandable information about the fees in the contract.
Your cell phone service contract must provide clear and detailed information including the following:
The minimum monthly cost is the basic amount that a customer would pay per month regardless of usage – essentially the amount you would pay if you did not use the phone during the month.
The new legislation will require companies to clearly explain all warranty protection. If the phone provided by the company is being repaired, and a replacement phone is not offered, the consumer does not have to pay for service while the cell phone is being repaired. This does not apply to equipment purchased separate from the contract or if the damage is the fault of the consumer.
If you were given a phone for no cost or at a reduced rate when you signed up for a fixed term contract, the cancellation fee will be based on the value of the phone, pro-rated over the remaining term of the contract.
For example:
You receive a $300 phone at no cost when you signed a three-year (36 month) contract. You cancel the contract after one year (12 months). The maximum cancellation fee is $200: $300 - ($300 x 12 / 36) = $200
If you were given a phone for no cost or at a reduced rate when you signed an indeterminate contract (no fixed term), the maximum cancellation fee is also prorated, based on a 48 month time period.
For example:
You receive a $300 phone at no cost when you sign a no-term contract. You cancel the contract after 12 months. The maximum cancellation fee is $225: $300 – ($300 x 12 / 48) = $225.
If you were not given a phone as an incentive for signing a contract (you may have used a phone you already had or bought a phone to use), the maximum cancellation fee is $50 or 10 per cent of the remaining cost of the contract, whichever is less.
The company must include information in the contract on the value of any phone provided for free or at a reduced cost (the subsidy). This is the maximum amount that can be used in the calculation to determine the cancellation fee.
A customer can cancel a cell phone contract at any time but should be aware that they may be charged cancellations fees.
Yes – the maximum cancellation fee is $50 or 10 per cent of the remaining cost of the contract, whichever is less.
Companies must provide you with a paper bill if you request one. There may be an additional fee for the paper bill. If you don’t receive a paper bill after you’ve requested one, or if you still can’t understand your bill, you can contact the Consumer Protection Office for help.
Cell phone service advertisements must state the minimum monthly cost and customers must be able to access a service plan at this cost. If your cell phone bill is higher than the advertised price, it may be because you purchased a different plan or have accessed pay-per-use services.
The warranties may have different time periods and coverage. This information should be provided by the cell phone company. Cell phone companies must clearly explain all existing warranty protection before selling additional warranty protection.
A cell phone company can change what are called “non-material” elements of the contract – which do not involve the price or the service. Examples might include the suppliers’ website, contact information, customer service availability, and methods of bill payment. The customer must receive at least 30-days notice of these types of changes.
A cell phone company can’t change a material element of the contract (including the minimum monthly cost), unless the change benefits the customer.
A change to the contract that the customer and the business both agree to is fine.
Customers must be informed by written notice that the contract is expiring, for any contract of at least 60 days.
If a customer does not let the business know that he or she wants to end the arrangement when the contract expires, the company can renew the contract, but only on a month-to-month basis. In other words, unless you and the company agree to another contract or one of you cancels the contract, it will continue on, on a month-to-month basis.
A company can ask for a security deposit. Under the new laws, a company can’t cancel the contract if a customer fails to make a payment, when the amount in the security deposit is more than what is owed.
If you have questions about the new rules, or you have a problem with your cell phone contract, you can contact:
The Consumer Protection Office
