Preparing for the unexpected : Compensating consumers for catastrophic events

The majority of consumers in our focus groups reported that they were able to obtain satisfactory compensation from merchants during the pandemic. However, they complained of having to deal with interminable delays, a chronic lack of information from companies and major communication difficulties. In addition, consumers claimed to have lost money in a number of situations, for instance when they preferred to cancel rather than accept the service that the company was able to provide at a later date. Clearly, consumers want the option of getting a refund, despite being sympathetic to businesses that are having difficulty.

Reimbursement terms for business purchases are sometimes unclear and vary from one industry to another. In particular, online platforms for the purchase of travel services or tickets tend to disavow responsibility in the transaction and leave it to the final service provider to determine the rights of the consumer.

 In addition, some companies lay down conditions that could make it difficult for consumers to be fully compensated in the event of a catastrophic occurrence, in particular by authorizing them to withhold a fee from the amount remitted, by offering insurance with exclusions, by prohibiting consumers from transferring their right of access to the service or by simply prohibiting them from claiming certain of their legal remedies.

While Canadian law requires that consumers be reimbursed when a service is impossible to provide, it nevertheless tends to promote the stability of contracts and the maintenance of performance of a service, even when the service is provided in a very different way. The various consumer protection laws do contain some cancellation mechanisms for consumers, but these are fragmentary at best, varying from one jurisdiction to the next and depending on the type of transaction involved. In short, there is no truly comprehensive regime. 

In addition, the law provides no solutions for specific situations that arose in the wake of the Covid-19 pandemic, particularly that of consumers requesting the cancellation of a service they no longer wish to benefit from for legitimate reasons such as fears for their health. Unlike other countries worldwide, Canada did not intervene energetically in contractual relations during the pandemic.

Due to climate change, catastrophic events are not only likely to continue to occur in the years to come, but to do so with greater frequency and intensity. Consequently, Option consommateurs recommends the establishment of a consumer protection regime applicable in the case of catastrophic events, which would include cancellation and reimbursement rights for consumers, the imposition of specific deadlines for such compensation, and a prohibition on imposing fees on refunds.