Archived—Project Summaries 2008-2009 - Option consommateurs

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2120 Sherbrooke Street East, Suite 604
Montreal, Quebec
H2A 1K3
Tel: 514-598-7288
Fax: 514-598-8511

1. Notice to Participants in Class Actions: Effective Communications Strategy?


Class actions are a way for citizens to gain greater access to justice. They are extraordinary actions: though often carried out on behalf of a single consumer, they will affect the rights of hundreds or even thousands of people. Many class actions in the area of consumer law require every member to file a complaint in order to obtain the compensation they are entitled to.

The rules of procedure for class actions require notices to be sent to members informing them of their rights. However, members are often only informed by the publication of notices in the newspapers. It is not uncommon for the notices to run in a newspaper's want ads section on a weekday. However, many class action specialists consider this inadequate and believe it constrains the Total number of members' complaints—a realistic assumption, as Option consommateurs frequently receives calls from class action participants saying they never saw the notices published in the newspaper and, consequently, did not file a complaint. These problems are significant because they affect the amount of the compensation ultimately paid by the companies being sued. Indeed, the more effective the communications strategy adopted, the likelier it is that the amount of the compensation paid by the company being sued will be the maximum allowed in the regulations.

Through its research, Option consommateurs is seeking to assess the various communications strategies that could be implemented to reach consumer class action participants so that they can exercise their right to be compensated for the wrong they have suffered.

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2. Cell Phones and Young People's Debt: An Update


Cellular phones are expensive, especially when the package subscribed to does not fit the consumer's needs or the device is used to send or receive text messages or to download music or email. And that is something young people find out, to their cost, either when they are teenagers or a few years later. Moreover, according to the Canadian Wireless Telecommunications Association (which has no statistics on teenagers), most consumers using these services are in the 18-to-34-year-old age group. Thirty-one percent of those in that age group send or receive text messages on their cell phones, while 19 percent use them to download content.

The objective of this research is to find solutions so that young consumers do not find themselves paying through the nose for services for which they were not informed upfront of the cost, and for which they cannot estimate the cost during use.

In its research, Option consommateurs will look at how much teenagers aged 15 to 17 spend on their cell phone service compared to young adults aged 18 to 21 and will consider the impact of these expenses.

  • Are young people surprised by how much they are charged?
  • Do they find costs to be excessive?
  • What happens if they cannot pay?
  • Are they ready to give up their cell phone for a landline, which is much less expensive?

Based on what Option consommateurs observed during budgetary consultations, a great many of them will not hear of it. They regard their cell phone as a necessity.

This research will also help to gradually reduce the numbers of young people that get into debt because of their cell phone bills. Finding legal and technical solutions to induce cellular service providers to shoulder their responsibility toward young consumers should finally help eliminate the traps they now set out for young consumers.

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3. Telecommunications Companies: Incomprehensible Single Invoicing


More and more consumers are deciding to buy all their telecommunications services (home telephone, cell phone, Internet, cable or satellite television) from a single company—either because they find it more practical, or because they are attracted by the enticing reductions offered by the service provider. In December, for example, Videotron offered a holiday special for $69.95 a month, consisting of Illico digital television, Internet and cable telephone. And Bell offered its customers a combination of three to five services (residential telephone, long distance, Internet, television, cell phone).

Those who accept such offers receive only one invoice from these companies for all their telecommunications services; this is what we call single invoicing. It may seem practical, but it carries with it a big disadvantage: it is extremely difficult for consumers to understand the invoice. This is because of the many services invoiced, but also because of the various promotions included, at times geared to one service, then another, and sometimes to all. This situation is of great concern. Consumers are unable to decipher their invoice and do not understand which specific services they are paying for. As such, they would be unable to detect a potential billing error.

Through this research, Option consommateurs will be looking into the main problems facing consumers that opt for single invoicing when they try to understand the invoice they receive, as well as their client service experience when they seek help from the service providers. Once this information is in hand, Option consommateurs will look at possible solutions.

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4. Credit Cards: New Solutions for Better Consumer Protection?


Credit card use is becoming more and more complex and consumers are a little at sea. In recent years, credit card issuers have come up with all kinds of new business strategies which, though outwardly enticing, may trap consumers. In the opinion of Option consommateurs, the "payment holidays" consumers are offered after the Christmas season, the preferential introductory rates with many very rigorous conditions, and the reduction of minimum payments are examples of such traps. These changes in practice can lead to increased consumer indebtedness and cause hardship down the road.

The purpose of this study is to inventory industry practices intended to encourage consumers to use their credit cards, to evaluate consequences for consumers and to propose solutions so that consumers will be better informed and protected and make informed decisions.

Option consommateurs has done a research project on the readability of credit card account statements for marginally literate persons. The research herein will complement Option consommateurs' own expertise and help improve their work on dealing with credit and debt overload, whether vis-à-vis consumers or government agencies. This will enhance Options consommateurs' ability to take action to help consumers make informed choices.

This research may also be of use to government agencies charged with helping and informing consumers, such as the Financial Consumer Agency of Canada, the Office of Consumer Affairs or the Office de la protection du consommateur.

Option consommateurs will attempt to answer the following questions in particular:

  • What are the credit card issuers' practices?
  • What are the impacts on consumers?
  • Does the current legislative framework adequately protect consumers?
  • What measures could we consider to better inform and protect consumers?

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5. Non-traditional Mortgage Products


Canadians have access to an increasing variety of mortgage products. Many of these new products are now offered by so-called non-traditional financial institutions. For example, (1) Canadian Tire, a very well-known retailer, sells an "all-in-one" mortgage product; (2) GE Money, a subsidiary of General Electric, has launched a 40-year mortgage; lately, (3) Street Capital Financial announced its intention to branch out into high-risk loans.

Option consommateurs believes it is urgent to examine the question of the emergence of new mortgage products from non-traditional financial institutions, for the following two reasons. First, a large number of Canadians are interested in buying a home. These consumers could be tempted by these new products. Secondly, other retailers could try to break into the Canadian mortgage market.

The key objectives of the research project are:

  • to improve Canadians' knowledge of new mortgage products sold by non-traditional financial institutions;
  • to assess the public's knowledge through a Canada-wide survey; and
  • to propose easy-to-use tools for consumers.

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6. Use of Credit Files for Non-financial Purposes


For some years now, a number of companies have been using credit reports and ratings to assess the "risk" particular consumers represent. However, this practice raises certain questions of relevance and reliability. A survey done by the Public Interest Advocacy Centre in 2005 showed that 18 percent of Canadians who checked their credit file found errors. These errors can cause consumers significant harm when applying for a job or taking out damage insurance. Option consommateurs has done a field study to identify errors in Canadian consumers' credit files.

In addition, the Autorité des marchés financiers, Quebec's regulatory body for financial services, stated in its 2006 annual report on automobile insurance rates that the use of credit ratings for insurance pricing purposes was, for the first time, the predominant price-setting mechanism.

Option consommateurs will undertake to research this growing phenomenon in Canada; assess the situation and its impact on Canadian consumers; and finally, will propose appropriate solutions and recommendations to control the practice.

Option consommateurs will attempt to answer the following questions in particular:

  • What are the impacts of this practice on Canadian consumers?
  • Is this practice sufficiently well controlled?
    Moreover, false and erroneous information may be found in credit files and reports.
  • Do creditors and third parties making use of that information question the accuracy of the data in the credit reports?

Option consommateurs hopes that this project will allow the representatives of Canadian consumers, regulatory bodies, credit bureaus and companies making use of credit reports and ratings to improve their knowledge of credit file practices and so to better control this emerging practice.