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8. Cancellation and Reversal of Credit Card Charges

(a) Overview

If a supplier has failed in their restitution duties, the CPA imposes duties on credit card companies to cancel or reverse illegal and other charges (and related interest and fees) after the consumer makes a Request (a Notice) to do so [CPA 99(1)]. These rules are explained in this section.

General credit card regulation is discussed in more detail in the chapter entitled "Loans and Credit Agreements", s.7 "Credit Card Regulation".

*** Note that CPA 99(7) provides for the making of regulations to extend these charge reversal and cancellation rules to other payment systems, but that to date no such regulations have been passed.

(b) Where Available

These rights of cancellation and reversal apply in the following situations [CPA 99(2)]:

• restitution of payments made to a supplier under a now-cancelled consumer agreement (and related agreements) [as explained in s.3 and 4 above]
  
  
• to recover a CPA-illegal fee, charge or payment [CPA s.98(1)] [discussed in Ch.5, s.4(d): "CPA Consumer Rights: Prices, Estimates and Extra Charges: Recovery of Illegal Charges"]; and
  
  
• to recover monies paid for unsolicited goods or services [CPA 13(6-8)] [discussed in Ch.5, s.5: "CPA Consumer Rights: Negative-Option Contract Formation"].

(c) Failure of Recovery from Supplier is Precondition to Request to Reverse or Cancel Credit Card Charge

Prior to making a request to a credit card company to cancel or reverse charges, the consumer must first have unsuccessfully sought their remedy directly from the supplier [CPA 99(3)]. In the case of cancellation (rescission) this means the giving of proper notice to the supplier of the cancellation, and in the case of illegal charges this means the making of a proper demand to the supplier for refund. These notice and demand procedures are set out at the references noted in (b) above, and give the supplier fixed times in which to provide refunds.

(d) Request (Notice) Procedures

The request (Notice) to the credit card company must be made within 60 days after the end of the period that the supplier had to comply with the notice or demand given to them [Reg 85(1)].

Requests (Notices) to credit card companies to cancel or reverse these charges must be made in writing, signed and served and in accordance with the Notice requirements of s.7 above [CPA 99(4), CP Reg 85(2)], and must contain the following information:

• the consumer's name;
  
  
• their credit card number and expiry date;
  
  
• the name of the supplier;
  
  
• if available and applicable, the date of the consumer agreement;
  
  
• details of each charge sought to be cancelled or reversed, including date posted (on the credit card account), amount and description of the transaction;
  
  
• where the charges relate to a cancelled (rescinded) consumer agreement:
  
  - a statement to that effect
  
  - the date of the cancellation, and
  
  - an explanation of the method by which the consumer gave Notice of Cancellation to the supplier.
  
  
• if the charges relate to CPA-illegal amounts:
  
  - a statement to that effect
  
  - the date of the refund demand
  
  - an explanation of the method by which the consumer gave the demand to the supplier.
  
  
• if the charges relate to payments respecting unsolicited goods or services:
  
  - a statement to that effect
  
  - the date of the refund demand
  
  - an explanation of the method by which the consumer gave the demand to the supplier.

Failure to comply fully with these requirements will probably result in the credit card company declining to honour the request to reverse or cancel the charges.

(e) Credit Card Company Duties

On receipt of such a Request, the credit card company shall [CPA 99(5), CP Reg 85(3,4)]:

• acknowledge the Request within 30 days after service;
  
  
• investigate if the Request is legitimate and complies with the notice or demand requirements, and then
  
  
• by the date of the second following credit card account statement (ie. not the next statement, but the one after) either:
  
  - in the case of a request they deem proper, cancel or reverse the charges and any related interest or fees;
  
  - in the case of a request they deem improper, "send a written notice to the consumer explaining the reasons why the credit card issuer is of the opinion that the consumer is not entitled to cancel the consumer agreement or to demand a refund under this Act."

If the consumer disagrees with a credit card company's refusal to cancel or reverse such charges (and related interest or fees) the consumer may sue the credit card company [CPA 99(6)] [see s.9 below].


9. Civil Court Remedies for General CPA Rights

(a) Overview

Setting aside CPA law, rights granted under most contracts are traditionally enforced through the civil courts under common law principles of contract, and perhaps tort, law in Ontario's main Superior Court.

The CPA expressly adds civil court enforcement for several specific CPA-created rights [listed in (b) below]. These can be advanced in the Superior Court of Justice [CPA 100(1)]. As most consumer transactions are under $35,000 in value [the Small Claims monetary limit at August 2020], consumers can advance their claims in this much more accessible court since it is a branch of the Superior Court [CJA 22(1)]. Few consumer transactions would be worth pursuing in the main Superior Court [above $35,000], except in the case of class actions (mentioned below) - but this higher court route is available.

Note additionally that the Small Claims Court has jurisdiction to order the recovery of possession of personal property (ie. chattel goods) to $35,000. This can be useful when a consumer is seeking the return of 'trade-in' property.

Procedures for the Small Claims Court are explained in detail in the Isthatlegal.ca Small Claims Court (Ontario) Legal Guide.

(b) General CPA Rights That May be Civilly-Enforced

Below are the 'general' CPA rights that may be enforced through the civil courts. Note that if you are pursuing legal rights granted you under the 'unfair practices' provisions of the CPA [CPA Part III], separate legal and procedural provisions apply - covered in Ch.6 of this Guide [CPA 91]. Also note that sector-specific rules may create additional rights of action (see the chapters that apply to you).

These rights have preliminary Notice requirements that must be satisfied before the right to sue accrues (see s.7 above for these Notice requirements):

• Restitution on Cancellation of Consumer Agreement
  
  This topic is dealt with in much more detail in s.3 above ["General Rescission (Cancellation) Remedies"]. Essentially though, the CPA provides that consumer agreements that are not "made in accordance with" the CPA may be rescinded (cancelled) by the consumer, and when that happens the parties are under duties to (as far as money can do) to put each other back into the positions that they were in prior to the contract being entered into. This is sometimes referred to as restitution 'ab initio' (from the beginning). Generally, when these duties are not complied with, the other party may sue for restitution and other remedies [CPA s.96(6,7)].
  
  
• Recovery of Payments Made for Unsolicited Goods and Services
  
  This topic is explained in more detail in Ch.5, s.5 ["CPA Consumer Rights: Negative-Option Contract Formation"], and primarily relates to 'negative option' sales techniques where goods are left with a consumer or services performed 'for them' without their consent, and then a bill is tendered. Any payments made by a consumer in these circumstances may be recovered by civil court action [CPA 13(8)].
  
  
• Recovery of Illegal Charges and Payments
  
  This topic is explained in more detail in Ch.5, s.4(d) ["CPA Consumer Rights: Prices, Estimates and Extra Charges: Recovery of Illegal Charges"]. Such illegal or prohibited charges and payments, if paid by the consumer (even if to someone other than a supplier), may be recovered by civil court action [CPA 98(3,4)].
  
  
• Cancellation of Some Credit Card Charges and Interest
  
  This topic is explained in more detail in s.8. That discussion explains how credit card charges (and related interest and fees) for the above three types of consumer-paid monies are subject to being cancelled or reversed in favour of the consumer by the credit card company (unless of course the supplier has refunded them already). If the credit card company fails to comply with these duties then the consumer can sue for return of the charges, interest and fees [CPA 99(6)].

(c) Court Restitution Remedy

In terms of civil court remedies, the CPA is focussed on 'restitution', which corresponds to it's primary 'rescission' remedy. Recall that rescission ab initio attempts to restore the position that the parties would have been in had the contract never been executed.

A consumer's right to sue for restitution is set out in CPA 100(2), which reads:

100(2) If a consumer is successful in an action, unless in the circumstances it would be inequitable to do so, the court shall order that the consumer recover,

(a) the full payment to which he or she is entitled under this Act; and

(b) all goods delivered under a trade-in arrangement or an amount equal to the trade-in allowance.

Remember though, just showing a breach of these provisions [(b) above] may not be enough to prove your case, as the (IMHO) over-applied 'equity' exception may be applied [see Ch.7, s.3(d) 'The "Inequitable" Exception']. A plaintiff that fails to prepare for this key provision [CPA 93(2)] is on highly risky grounds.

Also note that a consequence of the CPA 'connecting' the CPA restitutionary and damages (including punitive damages) remedies [below] in the way that they do [CPA 100(1-3)], is that if the CPA 93(2) 'inequitable' exception is applied to avoid a restitutionary remedy, then no CPA damages jurisdiction is available to the court.

(d) Damages and More

In addition, the CPA also provides for "such other relief as the court considers proper" [CPA 100(3)], which will almost invariably be applied as a damages remedy, particularly in the Small Claim Court where most of the actions will commence (the Small Claims Court cannot order such remedies as declarations or injunctions). Any doubt about the remedial range of this provision is resolved in a plaintiff's favour by CPA 6:

CPA s.6
Nothing in this Act shall be interpreted to limit any right or remedy that a consumer may have in law.

'Damages' as a remedy are very familiar with the judge you will be appearing before - more so that rescission, which is normally advanced as a common law right for such things as mistake or misrepresentation. The heavy use of rescission in the CPA context is unfamiliar to some judges. You should be prepared to explain that your's is fundamentally a CPA case, and be ready to explain it to the court if needed (it's best to make this first plain in your Statement of Claim).

Normal civil damage rules are discussed in more depth at this Isthatlegal.ca link: Small Claims Court (Ontario) Legal Guide [see s.2(n): "Pleadings: Principles of Pleading: Pleading Damages"].

(e) Exemplary and Punitive Damages

Additionally, punitive or exemplary (the terms mean the same) damages may be also ordered by a court "in addition" to restitution awards [CPA 100(3)]. That is, a punitive damages award can supplement a restitution award, but cannot be made on its own.

The common law of punitive damages generally requires seriously egregious conduct on the part of a defendant, and they are awarded far less often than most people think (and most freshly-aggrieved plaintiffs hope). The common law punitive or exemplary damages test is discussed at more length in this Isthatlegal.ca link: Damages [scroll down to the punitive damages link]

However it may be that the common law punitive damages test is not the only one to apply here. The Supreme Court of Canada, in the Saskatchewan case of Prebushewski v Dodge City Auto (1984) Ltd (SCC, 2005), considered whether exemplary damages should have been awarded under a statutory consumer protection exemplary damages provision that was triggered on 'wilful' breach of the Act (there one of a statutory warranty). The court held that the statutory exemplary damages provision did not adopt the common law punitive damages test, but rather was one specifically intended for the consumer protection context - and as such did not require a finding of bad faith, only 'wilfulness' as the statute required. Unwilling to interfere with the fact finding of wilfulness by the trial court, the SCC upheld the trial ruling awarding exemplary damages.

Similar to the Saskatchewan situation in Prebushewski, the Ontario general restitution provisions [see the list in (b) above], which triggers the corresponding punitive and exemplary damages [under 100(3)], also have express statutory triggers. In light of Prebushewski, it may be unnecessary for a plaintiff to also have to satisfy the common law punitive damages test - rather a particularly bad instance of these statutory breaches may suffice.

The Supreme Court of Canada made this point clear when in explaining itself it cited and endorsed the same principle for interpreting a Saskatchewan CPA 'unfair practice' provision that similarly allowed exemplary damages:

[para 30] One can find additional support for the view that s. 65(1) represents a departure from the common law test for exemplary damages from the way such damages are referred to in s.16, contained in Part II of the Act. Part II addresses unfair marketplace practices. Section 16(1)(b) provides that when a court finds that a supplier has committed an unfair practice, it may award the consumer damages in the amount of any loss suffered because of the unfair practice, including punitive or exemplary damages;

[para 31] Section 16(1)(b), by referring to punitive or exemplary damages without any limiting modifiers, can be seen as alluding to a different test for exemplary damages than the one set out in s. 65(1). The use of different language in s.16 and s.65 must be presumed to be meaningful.

(f) Evidence

. Overview

The principles of evidence that will apply to most CPA claims are discussed in the Isthatlegal.ca Small Claims (Ontario) Legal Guide at the following link:

Small Claims Court (Ontario) Legal Guide: Ch.15 Evidence
Those rules for that court are quite forgiving and allow a wide range of otherwise inadmissible evidence in. If however a claim has to be advanced in the regular Superior Court where the court can award more than $35,000 [the Small Claims Court maximum monetary limit as at August 2022], the rules can get quite involved.

What follow are the few evidence rules that are specific to CPA claims. These can be considered to be additions and modifications to the evidence rules of the civil courts.

. Civil Court Use of Evidence Obtained in an Official CPA Capacity

While it asserts a general duty of confidentiality over staff and officials respecting information and evidence obtained during their duties, the CPA does allow them to testify in court proceedings "under this Act" [CPA 120(1,2)].

More specifically, in addition to confidentiality exceptions for normal inter-governmental and law enforcement use - and with the consent of the party to whom the information relates - such evidence may be disclosed "as required in connection with a proceeding under this Act or in connection with the administration of this Act or the regulations".

While the CPA itself does not clarify if "a proceeding under this Act" includes a lawsuit, a plain reading interpretation is that it would apply to all those cases where the CPA specifically sets out a private right of civil action [as in (a) and (b) above]. In fact, CPA 52 uses the term "proceeding" in just such a civil lawsuit sense. Further, the authoritative Legislation Act, which embodies rules of standard legislative usage, uses the term in a similar 'civil court' fashion.

Finally, the CPA itself [CPA 120(2)] plainly alludes to such use of officially-obtained information and evidence:

CPA 120(2)
Except in a proceeding under this Act, no person shall be required to give testimony in a civil proceeding with regard to information obtained in the course of exercising a power or carrying out a duty related to the administration of this Act or the regulations.

This raises the interesting issue or whether (and how) such officially-obtained evidence is admissible in a civil claim that is grounded under both the CPA and the common law. It seems that it would be practically impossible to isolate evidence for one use and not for the other.

Further, anyone wishing to rely on such evidence should not ignore the summons requirements set out in the Small Claims Court (Ontario) Legal Guide chapter on Evidence, linked above. It is not generally safe to rely on verbal assurances from government or organizational personnel (or any witness for that matter) that they will show up to testify. Additionally, a summons enables the party issuing it to specify what documentation they want the witness to bring with them to the trial.

Note that while CPA 122 provides for the use of Director-certified statements in court as a substitute for in-person testimony by staff or officials, this provision applies only to consumer protection administration procedural events (ie. filing of documents, etc) and only replaces in-person testimony when there is no "evidence to the contrary". This provision is intended for use in prosecutions, where consumer protection administration procedural events are more relevant. They are discussed further in Ch.9: "CPA Prosecutions".

(g) Legal Assistance

Since major amendments to the Law Society Act, paralegals are now clearly authorized to act as legal representatives in the Small Claims Court and to represent their clients accordingly. Indeed, both paralegals and lawyers are exempt from all CPA rules in both their service-provision capacities [CP Reg 1].

Others though - including CPA suppliers, who may offer assistance to consumers are subject to the CPA generally as providers of consumer services, and more specifically to a rule that prohibits them from charging for such assistance without onerous preconditions [CPA 12]:

CPA 12
No person shall charge a consumer for assisting the consumer to obtain any benefit, right or protection to which the consumer is entitled under this Act, unless, before the consumer agrees to pay the charge, the person discloses the entitlement's existence and direct availability to the consumer and the cost, if any, the consumer would be required to pay for the entitlement if the consumer obtained the entitlement directly.

I would be hard-pressed to satisfy these preconditions myself as I simply don't know what is meant by "direct availability", much less how much it costs.

Nonetheless, if charges for assistance are made before such conditions are complied with - by either a supplier or a non-supplier - the charge is an illegal charge as discussed in Ch.5, s.4(d): ["CPA Consumer Rights: Prices, Estimates and Illegal Charges: Recovery of Illegal Charges"], and is subject to recovery by lawsuit as discussed this section [CPA 98(4)]. Note that commencement of any proceedings to recover such charges must be preceded by proper Notice as is explained in s.7 above. Insofar as a supplier would purport to legally advise or assist a consumer in a conflict that involves themselves, that may be a suitable case for punitive damages.

(h) Class Actions and the CPA

Most readers will have heard of 'class actions', which are not so much remedies on their own but rather are techniques, available under Ontario's Class Proceedings Act, for consolidating plaintiffs and defendants into 'classes' to facilitate the advancement of claims that are, individually, too small for individuals to pursue in a financially viable way.

To ensure and faciliate that class actions remain available to consumers, the CPA provide that:

• "any term or acknowledgment in the consumer agreement or a related agreement that purports to prevent or has the effect of preventing the consumer from commencing or becoming a member of a class proceeding" is unenforceable by the supplier [CPA 8(1)];
  
  
• "after a dispute that may result in a class proceeding arises, the consumer, the supplier and any other person involved in it may agree to resolve the dispute using any procedure that is available in law" [eg: arbitration: see s.2(b,c) on this issue] and a "settlement or decision that results from" such a procedure" is as binding as it otherwise would be [CPA 8(2,3)];
  
  
• while normally in arbitration, a party may apply to the courts for a 'stay' (suspension) of any court proceedings relating to the matter being arbitrated [Arbitration Act, s.7(1)], that right does not apply to attempts to force arbitrations if they are based on 'fine-print' clauses contained in the consumer contract [CPA s.8(4)].

It is beyond the scope of this Isthatlegal.ca Consumer Law (Ontario) Guide to explain class action law further, but there have been class actions launched grounded in CPA rights and they offer the hope of bringing to bear the degree of legal expertise and attention that is not likely forthcoming when individual consumers have to pursue cases on their own limited resources.