Project Summaries - Option consommateurs

604 – 2120, rue Sherbrooke est
Montreal, Quebec
H2K 1C3
Tel: 514-598-7288
FAX: 514-598-8511
E-mail: bélanger@option-consommateurs.org
Web: www.option-consommateurs.org

1. First-time Home Buyers: Getting in Too Deep?

$38,100

"The debt ratio of Canadian households reached 115% in 2003. On top of that, data show that many new homeowners have trouble meeting their payments. Still, in recent years, a number of factors have combined to make home ownership more accessible: very low interest rates, the option of buying a home with no down payment (through mortgage insurance) and the Home Buyers' Plan (HBP). Do all of these facilitators really benefit young home buyers financially? Does buying a home put them too deep in debt?"

Option consommateurs (OC) proposes to analyse and establish a profile of mortgage and credit practices and their impact on young first-time home buyers. The project also aims to measure the advantages and disadvantage of those practices for consumers and make recommendations in order to improve the situation in the interest of Canadians.

Research methodology

Phase 1: Literature review and interviews

OC will conduct a literature review in order to draw up an inventory of the measures used to foster access to home ownership, such as the criteria used by financial institutions when granting mortgages, the home ownership incentives of the Canada Mortgage and Housing Corporation (CMHC) and GE Capital and other home ownership programs. OC will also analyse the available statistics in order to establish a profile of young first-time home buyers and their financial situation. This component of the study will also include interviews with key stakeholders in the private and public sectors. OC plans to contact CMHC, GE Capital, Equifax, TransUnion, trustees, Hydro-Québec, Gaz Métro and other utilities, and representatives of consumer groups in order to complete its analysis.

Phase 2: Background interviews

This phase of the study will include some 20 background interviews with young consumers who have bought their first home (their age, income and family structure will be stated). Option consommateurs will issue a news release asking consumers to contact the organization and will post a notice on its Web site. OC will also ask consumer groups to refer young couples who have just bought their first home (through the many budget consultations carried out by those groups). Based on past experience, this approach should draw approximately 50 calls or referrals from which OC will select the 20 households most suitable for this project. OC's budget advisers will assess the impact of the home purchase on the young owners' debt load and determine whether the families are having any financial problems since buying their home. The interviews will be prepared in cooperation with the qualitative methodology expert.

Phase 3: Analysis and solutions/Communication.

Finally, OC will analyse the data from the literature review, the statistical research and the background interviews with young homeowners and produce a final report. Option consommateurs will release its research report and submit its recommendations to the Canadian Bankers Association, the Financial Consumer Agency of Canada, CMHC, the Office of the Superintendent of Bankruptcy, Canadian financial institutions and consumer groups.

2. Improving Financial Protection for Consumers Who Purchase Tickets Directly from Airlines

$30,300

"In recent years, the governments of Ontario, Quebec and British Columbia have taken measures to provide financial protection for consumers who lose money after purchasing a trip from a travel agency or wholesaler. However, consumers who purchase tickets directly from an airline are not protected by any security or compensation fund. Airlines are federally regulated and, unlike some provincial jurisdictions, the federal government does not provide any financial protection for consumers when an air carrier declares bankruptcy or ceases operations."

Option consommateurs proposes to evaluate the options for providing better protection for consumers who deal directly with air carriers.

OC plans to:

• study and analyse Canadian, American, Australian and European legislation that provides financial protection for consumers who purchase tickets directly from air carriers;
• meet with key stakeholders to get their views on the various proposals for regulating direct ticket purchases from air carriers; and
• draft a report outlining our analysis of the data gathered from the review of Canadian and foreign legislation and the opinions of the various stakeholders.

Finally, Option consommateurs will release the report containing the results of its research and its recommendations.

3. Canada-U.S. Cooperation on Regulation: a Consumer Perspective

$48,300

"The Government of Canada wants to make Canada-U.S. cooperation on regulation a priority in the coming years by introducing a single system for approving goods and services. Economic studies show that Canadians generally reap a net benefit when the government increases its cooperation agreements on regulation with the United States. Canadians, however, are more skeptical, especially when the perceived risks are high. There are many issues. Will the level of public protection be maintained? How can representatives of civil society be involved in discussions surrounding the cooperation agreements? Will increasing our cooperation with the United States enable Canada to meet its own objectives? etc."

The project essentially has four objectives:

1. enable Option consommateurs to develop greater expertise in Canada-U.S. cooperation;
2. analyse more specifically the advantages and disadvantages of introducing a single drug approval system and identify Canadians' views on the issue;
3. make recommendations to the federal government and, more specifically, the Privy Council and Health Canada;
4. lay the groundwork for dialogue on the issue between American and Canadian consumer groups.

To meet these objectives, Option consommateurs proposes to conduct a literature review in Canada, the United States and other countries as need be, conduct a Canada-wide survey with assistance from the firm Environics to determine consumers' perception of the introduction of a single system for approving drugs, and conduct interviews and meetings with various stakeholders (consumer groups, representatives of Privy Council, Health Canada, Industry Canada, the Policy Research Project, etc.). Note that Consumers Union has expressed interest in working with Option consommateurs to establish a Canada-U.S. dialogue between consumer groups.

More specifically, Option consommateurs will conduct:

• a literature review of policies on cooperation with the United States, existing cooperation agreements on drug approval, future agreements, any known impact, similar existing agreements elsewhere in the world, and existing approval processes in Canada and the United States.
• a public survey through a specialized firm in order to measure the public's perception of increased cooperation on the approval of drugs, public awareness and knowledge of the issue, etc. The questions will be developed with the polling firm and will be submitted to Privy Council officials for comment.
• interviews and meetings with representatives of American and Canadian consumer groups to lay the groundwork for Canada-U.S. dialogue, with representatives of the Government of Canada, in particular the Privy Council and Health Canada, and with the Best Medicines Coalition.

Option consommateurs plans to communicate the results of this project by sending them directly to the stakeholders met in the course of the project, publishing them in its magazine and on its Web site, and issuing a news release.

4. Five-year Review of the Bank Act

$39,800

"Owing to the importance of the banking sector in the Canadian economy, the Bank Act is reviewed from time to time. The review process for changes in 2006 will begin in 2005. There will be analysis of a number of provisions of the Act and problems related to its enforcement so that the requesting organization can participate in a constructive manner in the consultations that are part of the five-year review."

Option consommateurs proposes to:

• assess the impact of some of the rules established by the Act and any changes that might be made;
• better document the problems actually experienced by consumers; and
• take measures to help improve the rules set out in or under the Act.

The methodology will primarily take three forms. First, Option consommateurs will analyse the provisions of the current Act and conduct a comparative literature review concerning specific issues and standards in the United States, selected members of the European Union (United Kingdom and France in particular) and Australia. That research will be supported by a small number of very focussed interviews with people who are very familiar with these issues and aimed specifically at identifying normative instruments that would have to be taken into account in the comparative research.

Second, Option consommateurs will survey and analyse the complaints it received in 2004 and 2005 pertaining to electronic payment mechanisms in order to identify the most frequent and most significant problems that consumers seem to experience. Given the nature of the sample, it will not be possible to statistically extrapolate the findings of the analysis to all of Canada, but Option believes that it will at least be able put forward a number of hypotheses.

Third, Option consommateurs will participate actively in consultations related to the review of the Bank Act. Stakeholders will receive by mail or e-mail the report containing the research results and recommendations. Option consommateurs will also offer to meet with a number of key stakeholders, among them the Financial Consumer Agency of Canada, the Department of Finance of Canada and the Canadian Bankers Association, to present the results. The public will also be informed of the research results and recommendations.

5. Householder Comprehensive Insurance — Participation in the Consultation Process to Make Insurance Forms Easier for Consumers to Understand

$15,300

"The vocabulary used by the insurance industry is highly specialized and very hard for consumers to understand. That observation was made by the Task Force on the Future of the Financial Services Sector in 1998. Far from disagreeing with that conclusion, the Insurance Bureau of Canada (IBC) this year began reviewing its householder comprehensive insurance forms used by the insurers who cover more than 85% of householder comprehensive insurance premiums in Quebec. The IBC would like Option consommateurs to take part in the process and will table its report in June 2005."

The objective of this project is to make householder comprehensive insurance contracts easier to understand and make specific recommendations to that effect to the Insurance Bureau of Canada.

The planned methodology is to begin by revising three of the seven householder comprehensive insurance forms developed by the Insurance Bureau of Canada. Option consommateurs will analyse the documents based on the criteria for plain writing set out in its handbook entitled Écrivez clairement et simplement, Pour être lu et compris — Guide pour les rédacteurs en entreprise. OC will then set up a focus group to seek comments from consumers on the main points of the those forms.

OC will hold one or two meetings with representatives of the Insurance Bureau of Canada to track the proceedings of their forms review subcommittee and provide its comments. Finally, OC will draft a report on our proceedings and comments.

OC will meet with representatives of the Insurance Bureau of Canada to present the results of is analysis. Finally, all of the stakeholders will receive by mail or e-mail the report containing the results of its analysis and its recommendations. The report will be posted on the Option consommateurs Web site.

6. Right of Access to Personal Information: the Key to the Right to Privacy

$73,500

"Anecdotal information indicates that there are major differences in the understanding of what constitutes a "record" when it is requested by an individual. However, the Personal Information Protection and Electronic Documents Act permits access to all personal information held by an organization, not just information that might constitute "a" record and is unlikely to be all located in a single record. For example, an installer's log, a billing file, notes taken by a client service representative, e-mails about a client sent from one unit to another, collection records, records related to security breaches, etc."

The aim of this project is to conduct a preliminary, yet real, evaluation of the measures put in place by companies since the Personal Information Protection and Electronic Documents Act came into force to give their clients access to the information they hold on them. Option consommateurs proposes to determine the extent to which access is easy, fast and inexpensive and provides access to all of the information by a company on a particular client.

Options consommateurs will begin by drawing up a list of the requirements set out in federal and provincial legislation governing access to information held by companies on individuals. OC will also establish a list of the various types of personal information that a company is likely to hold on a consumer in one or more files or any other format.

The parts of the federal statue of greatest interest to OC are section 8, which deals with access procedures, and the following sections of Schedule 1, Principles Set out in the National Standard of Canada Entitled Model Code for the Protection of Personal Information, CAN/CSA-Q830-96: 4.1, accountability; 4.1.3, responsibility in respect of third parties; 4.1.4, implementation of policies and practices; 4.8, transparency; and 4.9, access to personal information.

OC will then use a "mystery shopper" approach. Consumers doing business with target companies will ask for a copy of the personal information the companies hold on them. OC will also collect data on the efforts of and costs incurred by consumers in requesting access to that information. Some 40 cases will be studied in various sectors: land line or cellular telephone service, cable television service, big box stores like Wal-Mart, financial services.

The study will involve two groups of consumers. The first group will comprise approximately 20 consumers who currently do business with the companies selected for the study. A second group will comprise approximately 20 consumers who will become new customers of the same companies selected for the first group. Each member of the two groups will have to conduct with the company or companies of which he or she is a customer a series of predetermined transactions (five or six) that, with the exception of opening a new account, will be same for everyone. Sample transactions are having a new service installed; changing a service; making a complaint; asking for technical assistance; and making a billing inquiry.

For the group made up of new customers of the preselected companies, OC proposes to cover 50% of the initial service connection fee, if there is one, as well as the monthly subscription charge for the period of the study, that is, between 10 and 12 months, depending on when service starts. Funds will also be provided for a minimum deposit when a new account is opened with a financial institution. OC believes that that amount should not be exceed $20 per person plus any applicable account opening fees.

OC believes that this approach (two groups — old and new customers) will enable it to determine if there are any differences depending on whether a record already exists or is newly created. OC has budgeted $50 per participant to compensate the people for the time they will spend making the transactions, requesting access, filling out their transaction log and doing any follow-up we ask them to do.

OC will then determine whether the information obtained meets the legal requirements and the list of information likely to be held by a company.

If the information obtained is incomplete, OC will ask the consumers to make additional requests and will evaluate any problems, delays and additional costs.

The names of the consumers and companies will be deleted, and a factual report will be produced. Because this is a preliminary study and the data will contain no names, OC does not plan to meet with representatives of the business sectors being studied.

The target audiences for the project are the Government of Canada, in particular Industry Canada, and organizations and companies that are required to comply with Canadian privacy laws. The results of the project will be communicated directly to the stakeholders concerned in meetings and written reports. They will also be released to the public.

7. Is Santa Claus Real? Canadian Consumers and Social Ethics

$47,000

"Today, more than 70% of the toys sold around the world are produced in conditions which rarely respect the basic rights of workers as recognized by the International Labour Organization. Many organizations in Europe and the United States are sounding the alarm and asking major toy distributors and manufacturers to make a commitment to enforcing those minimum labour standards. What are those actions that are increasingly mobilizing consumers worldwide? What is the situation in Canada? How do Canadian consumers perceive the working conditions of the workers who make the clothes and toys they buy?"

Option consommateurs proposes to profile international and national initiatives related to social ethics in the production of goods, particularly toys and clothing, and determine what Canadian consumers think about the importance of the social conditions in which the goods they buy are made.

To meet the objectives of the project, OC plans to proceed as follows:

Objective 1

Profile international and national initiatives related to social ethics in the production of goods, particularly toys and clothing.

• OC will conduct a literature review of awareness and action campaigns carried out in France by the Collectif de l'éthique sur l'étiquette and in the United States by the National Labor Committee.
• OC will describe and analyse three different codes of conduct and their content and implementation: one developed by a distributor (Carrefour in France), one developed by a manufacturer (Mattel) and one developed by a manufacturers association (International Council of Toy Industries).
• OC will carry out a literature review and conduct interviews on the actions taken in Canada by NGOs and toy manufacturers and distributors.

Objective 2

Determine what Canadian consumers think about the importance of the social conditions in which goods are produced outside Canada.

• OC will conduct a Canada-wide survey to determine Canadian consumers' perception of the importance of ethical production of goods outside Canada, their need for information on the subject and their desire to see a social label created.
• OC will make recommendations designed on including the concerns of Canadian consumers about the social conditions in which the goods they buy are produced.

Option consommateurs will present its research report and recommendations to Industry Canada and representatives of major Canadian distributors, the Canadian toy industry, the Standards Council of Canada, consumer groups, and the stakeholders met in the course of the project. The public will be informed of the research results and recommendations.

8. Guidelines for Cash Advance on Credit Cards

$30,500

"Credit card transactions are regulated by provincial legislation and debit card transactions are governed by a code of conduct, but there are no specific measures governing cash advances on a credit card using a personal identification number (PIN). Given that more and more consumers are making cash advances on a credit card with a PIN, it is essential that there be clear rules on consumer liability in the event of a problem."

Option consommateurs proposes to identify this problem, look at the solutions put in place in other jurisdictions and make recommendations to ensure that consumers are better protected if their card is lost or stolen or used without their permission.

To meet these objectives, OC plans to conduct a literature review in Canada, the United States, Australia and Europe, analyse the contracts of the main credit card companies and the specific terms related to cash advances, interview the stakeholders concerned and produce a report containing recommendations for improving consumer protection in this area.

Option consommateurs will include in its research on-line transactions using a credit card and PIN and the related liability conditions, such as "Secure with Visa".

Methodology

1. Literature review

The literature review will be done to collect data on regulations in Canada, the United States, Europe and Australia.

2. Qualitative analysis

Option consommateurs will analyse the contracts of the main credit card companies that offer consumers cash advances.

3. Meetings with key stakeholders

Meetings and discussions will be held with representatives of industry, government and consumer groups.

4. Data analysis

The information compiled during the study will be analysed in order to answer the following and other questions:

• What types of problems do consumers encounter in this area?
• What is the magnitude of the problems encountered by consumers?
• Is there provincial or federal legislation in this area?
• Are there methods used elsewhere in the world that increase consumer protection?
• What can be done to increase the quality of information and consumer protection related to cash advances obtained using a credit card and PIN?
• What are the views of governments, the industry and consumer groups on the issues being studied?

5. Report

Option consommateurs will write a report describing the situation and the steps we took under the project. The report will also contain recommendations for ensuring better consumer protection in this area.

Option consommateurs will also organize a meeting with the main stakeholders in order to present the results of its study and its recommendations. The stakeholders concerned will be sent by mail or e-mail the report containing the results of the study and the recommendations. The results will be made public.

9. Cross-border Class Actions and Consumer Rights

$29,500

"Class actions are also affected by globalization. A growing number of lawsuits involve national and international consumer groups. For several years, Canadian and American courts have been dealing with multi-jurisdictional class actions. In the United States, national class actions referred to as "multi-district litigation" (lawsuits covering two or more federal districts) are handled under special rules and are legitimized by court decisions. There is no similar framework in Canada."

The proliferation of cross-border class actions creates two problems: the territorial limits of legislation and judgments, and a practical problem of communication and information. The aim of this project is to answer questions of private international law and develop practical solutions to improve access to justice for Canadian consumers.

To meet these objectives, OC plans to study and analyse the Canadian, American and Australian legislation applicable to class actions. OC will also carry out a literature review on the subject in order to compile a comprehensive inventory of all the doctrine and case law that have been published. OC will also meet with stakeholders to gather their opinions on the proposed solutions. OC will write a report outlining its analysis of the data gathered from the literature review of Canadian and American legislation and the opinions of the stakeholders.

OC will also inform the public and the main stakeholders of the results of its research and its recommendations.

10. A Consumer Group's Take on an International Standardization Process: Development and Application of Standards ISO 10001 and ISO 10003

$36,300

"The International Standards Organization (ISO) is currently developing two international standards aimed at client satisfaction: one on codes of conduct, and one on external dispute resolution mechanisms. Once they are adopted and published by the ISO, the two standards will also have to be adopted in Canada. As a participant in this standardization process, the aim of which is to provide the world market with mechanisms for preventing and managing consumer complaints, OC would like to represent the interests of consumers as effectively as possible and ensure not only that the standards are widely applied, but also that they are respected by the organizations that apply them."

To meet the objectives of the project, OC plans to proceed as follows:

Objective 1

Improve consumer advocates' knowledge of the process of developing an international standard in order to intervene in that process as effectively as possible.

• OC will describe and analyse its experience as a consumer advocate in the framework of the development of standards.
• OC will conduct interviews with pertinent stakeholders, particularly stakeholders who represent consumers in international standardization processes and, more specifically, stakeholders who are part of the working group on standards ISO 10001 and 10003.

Objective 2

Analyse possible applications of the standards on consumer satisfaction and ways of ensuring compliance with the standards in the organizations that apply them.

• OC will conduct a literature review on the potential application of the standards from the perspective of different stakeholders (standards organizations, governments and consumers) and mechanisms for evaluating fulfilment of the obligations set out in the standard by the organizations that apply them.
• OC will conduct interviews with pertinent stakeholders active in the national standards system (Standards Council of Canada, Canadian Standards Association, Bureau de normalisation du Québec and Canadian General Standards Board), Canadian consumer groups, representatives of companies, particularly companies that are already ISO 9001 certified, representatives of the Department of Industry and other Canadian government departments, and representatives of some provincial departments, particularly those that deal with consumer protection.

OC will draft a final report and make recommendations. Option consommateurs will present its report and recommendations to Industry Canada and representatives of the Standards Council of Canada and the Canadian Standards Association, representatives of consumer groups, and stakeholders met in the course of the project. The public will be informed of the results of the study and the recommendations.