On January 1, 2017, new legislation governing towing and storage services came into effect. These changes come after years of complaints of inflated and seemingly arbitrary towing and storage fees and high-pressure tactics by the towing/storage industry. One Ottawa couple was billed more than $4,000 for basic towing and storage fees. This is a systemic problem that is estimated to contribute to billions of dollars in costs to Ontario drivers due to insurance fraud.
The Ontario government’s response was the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, which included amendments to the Consumer Protection Act, 2002, and the Repair and Storage Liens Act. These amendments provide drivers and insurance companies with powerful tools to combat unscrupulous towing and storage providers.
The Consumer Protection Act, 2002
By specifically including towing and storage services in consumer protection legislation, the Ontario government implicitly recognized the imbalance of power in the towing/storage provider-consumer relationship and the need to correct that imbalance.
In Ontario, consumer protection legislation tips the balance in the consumer’s favour by, among other things, providing for interpretations of legislation and consumer agreements to the benefit of the consumer. This balance towards the consumer may help prevent towing and storage providers from finding loopholes in potentially ambiguous language in the statute. For example, a towing company may try to argue that dolly or hookup fees are not “towing” services, but rather services ancillary to towing and, therefore, not subject to consumer protection laws. While it is true that neither “towing” nor “storage” are defined in the legislation, this argument would likely fail due to the Supreme Court of Canada’s direction to interpret consumer protection legislation “generously in favour of consumers.”
The new changes to the Consumer Protection Act, 2002 include the following requirements:
- authorization from the consumer or someone acting on the consumer’s behalf before towing or storing a vehicle;
- disclosure of rates and other prescribed information;
- acceptance of credit card payments for towing and storage services;
- notification to consumers where the vehicle will be towed;
- access to towed vehicles to remove personal property at no charge;
- an itemized invoice listing the services provided and costs; and
- disclosure of any financial incentives for towing a vehicle to a particular storage facility or repair shop.
Below are some further details of some of these changes.
A provider cannot charge for services not previously authorized by the consumer. The authorization must:
- be in writing, or there must be a written record of when and how the authorization was given;
- be given before any services are commenced; and
- include the name and contact information of the person giving authorization and the date and time at which the authorization was given.
If there is an estimate, the amount charged cannot exceed 10% of the estimated amount.
A provider must provide a written invoice containing certain prescribed information before demanding any payment. This required information includes:
- an itemized list of the services and the cost for each;
- the total cost;
- the date and time when the services commenced or are to commence; and
- the name of the tow truck driver
A provider must disclose to the consumer any interest in a location or facility in which a vehicle may be repaired, stored, appraised, etc. Failure to do so denies the provider the right to demand payment for any services provided to the consumer before such disclosure is given. This disclosure must be in writing, or there must be a written record of when and how this disclosure was given.
A provider cannot make certain unsolicited recommendations unless the consumer specifically requests such a recommendation, including:
- a preferred storage or repair shop;
- a preferred legal services provider; or
- a preferred health care service provider.
The Repair and Storage Liens Act
The Repair and Storage Liens Act provides repairers (and towing and storage providers) with rights to be paid for their services and “sets out a mechanism for the establishment and enforcement” of liens. Despite its purpose to provide recourse to providers, it also protects consumers from providers seeking to take advantage of this legislation.
Prior to the amendments in force on January 1, 2017, the Repair and Storage Liens Act already provided that no lien arises or takes effect where a repairer fails to comply with its obligations under the Consumer Protection Act, 2002:
- the obligation to provide a written estimate;
- the regulation of fees to prepare an estimate; and
- the obligation to obtain authorization prior to performing repairs.
The recent changes are similar, but relate to towing and storage services under the Consumer Protection Act, 2002. Where the repair work includes one or more tow and storage services in respect of which Part VI.1 of the CPA applies, no lien arises or takes effect with respect to those services where the provider fails to comply with the following obligations under that Part:
- invoicing; and
- failure to disclose interest.
Additionally, where there is a valid lien for towing and/or storage services, the amount of the lien cannot exceed 10% above the estimated amount, if any.
So, The Law is on Your Side… Now What?
A breach of the Consumer Protection Act, 2002 does not automatically entitle the consumer to recourse. For example, an unsolicited recommendation does not disentitle the provider from demanding payment, but it is an offence under the legislation.
However, where a provider would otherwise be disentitled to payment, or where there is a dispute regarding the amount of the payment, there are four main options:
- Negotiate a settlement;
- Commence a civil proceeding pursuant to the Consumer Protection Act, 2002 (practically speaking, most likely in the Small Claims Court);
- File an application under the Repair and Storage and Liens Act; or
- Rely on any dispute resolution mechanisms under certain municipal bylaws (e.g. 545-108 of the Toronto Code).
The changes to the Consumer Protection Act, 2002 and the Repair and Storage Liens Act are a welcome change after years of unscrupulous conduct by towing and storage providers. Drivers and insurance companies should become familiar with these changes and use these new tools as ammunition when dealing with difficult providers.
If you would like more information on the new changes, or if you are dealing with a difficult provider and are considering legal recourse, Mark Mandelker would pleased to provide you with assistance.