The legal landscape for online retail in Canada

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Disclaimer
This article is provided for general information only and does not constitute legal or other professional advice. eCommerce Worldwide does not owe any duty of care to any reader of this section of the country guide. You should consult a suitably qualified lawyer on any specific legal problem or matter.

 

The legal situation around online retail in Canada is complicated by its general devolution from federal to province / territory level.

 

In theory this means 13 different sets of terms and conditions needed. In practice, there is a very high degree of uniformity.

 

Key Points

  • Canadian online trading law will be generally familiar to those already trading online in developed countries. While it might vary in detail, it does not vary in general intent
  • Anti-spam legislation is unusually strict and backed up by swingeing fines on violators. Make sure your opt-out process works
  • Cookie law is rather more bland than Europeans will be used to
  • Personal data can be stored outside of Canada, provided a reasonable security regime is adhered to, none of which should present significant challenges to a non-Canadian retailer already observing good local practice with regard to data protection
  • The relevant legal regime is mildly complicated by the intersection of federal and province / territory law, which results in minor variations. In theory, this means 13 different sets of terms and conditions needed. In practice, there is a very high degree of uniformity. Following good practice in your home country is likely to have appropriate results in Canada
  • Seek professional advice from a qualified lawyer; this information has been provided for guidance only

Consumer law

Protection

 

Broadly, consumer protection is in the domain of the provinces. Provinces have enacted consumer protection acts to protect consumers from business malpractices.

 

For instance, the Quebec version1 of the law regulates contracts entered into by consumers and merchants, makes provisions for basic and legal guarantees on all goods and services, makes provisions for specific protection related to certain types of contracts and prohibits merchants to engage in deceptive practices.

 

The Quebec law is broadly in line with other consumer protection acts across the other provinces in Canada, there are no major differences.

 

While consumer protection is largely the domain of the provinces, the federal government has at times enacted laws where the provinces have been seen to be not acting strongly enough.

 

For example the Canadian Consumer Product Safety Act2 aims to protect the public by addressing or preventing dangers to human health or safety that are posed by consumer products in Canada, including those that circulate within Canada and those that are imported. This law introduces an ‘early warning system’ for products which may well pose a danger to health. It encourages swift and decisive action aimed at curtailing damage to human health.

 

Distance selling

 

Again, regulations on distance selling are done at a provincial level, but regulations are not very dissimilar across the country. For example, both Quebec and British Columbia ensure customers have a seven-day cooling-off period where consumers are able to cancel their order if they wish to do so.

 

In addition to the cooling-off period, certain key information must be exchanged between the supplier and the customer when distance selling.

 

Such information includes

 

  • the supplier’s name and, if different, the name under which the supplier carries on business
  • the supplier’s business address and, if different, the supplier’s mailing address
  • the supplier’s telephone number and, if available, facsimile number
  • an itemised purchase price for the goods or services to be supplied under the contract
  • other costs payable by the consumer, including taxes and shipping charges
  • if any customs duties, brokerage fees or other additional charges that may apply to the contract cannot reasonably be determined by the supplier, a description of those charges
  • a detailed statement of the terms of payment
  • the total price under the contract, including the total cost of credit

 

This list is that provided by the code for British Columbia3, but others are comparable. None of it is unexpected or particularly onerous for those operating under their existing domestic code.

 

Returns

 

There are no federal or provincial requirements in relation to the return policies of retailers. Put simply, businesses are able to define their own returns policies and able to decide for themselves what refunds are paid out to consumers. It is also legal for the return costs to be passed onto the consumer.

 

Good actual practice is benchmarked in the logistics article.

 

Data protection

PIPEDA

 

Like most other developed countries, Canada has strong data protection and privacy laws in place, predominantly at the federal level, but some provinces do also have measures in place. At a federal level, the Personal Information Protection and Electronic Documents Act (PIPEDA)4 is the cornerstone of this.

 

PIPEDA applies to organisations that collect, use or disclose personal information in Canada or transfer personal information across the Canadian border. The legislation only permits the use, collection and disclosure of individual’s data if that individual has given consent to it. Severe financial penalties apply if data protection laws are breached. There are ten overriding principles to the PIPEDA law.

Canada Data Protection

Figure 1:PIPEDA principles

Once again, none of this should present a challenge to retailers already complying with their own local codes of practice.

 

Keeping personal data outside of Canada

 

Canadian private sector privacy law does not prohibit the transfer of personal information5 outside of Canada. However, organisations remain liable for information they transfer outside of the country, and individuals must be notified of such transfers.

 

Therefore, before transferring data outside Canada, an organisation must ensure that it is able to meet its obligations under Canadian law by using appropriate means to ensure the recipient provides comparable protection for the information while it is being processed.

Setting up a subsidiary

 

This section is a very high level overview of the process you might need to undertake to set up a subsidiary in Canada, for example to act as a local distribution, returns or marketing agency. It is far from exhaustive, and intended to give a general flavour only.

 

Establishing in Canada

 

Setting up a limited company / business corporation can be done at either a provincial or federal level. If deciding to establish a subsidiary at a federal level, Corporations Canada deals with requests to establish a business corporation. They expect various info6 detailing articles of incorporation, name of business, fees, etc.

 

It is only when Corporations Canada has all the relevant information required from a request that it can approve the recognition of a corporation and there is no set time limit for when they can respond to a request. Alternatively, provincial options are also available for businesses.

 

Foreign ownership regulations

 

Broadly, there are very few regulations on foreign ownership in Canada and for decades now, Canadian governments have encouraged foreign direct investment aimed at offering improved economic prospects to Canadian workers.

 

The Investment Canada Act7 details how non-Canadians should go about seeking to establish a new Canadian business or to takeover an existing one. When establishing a new business, if you are a non-Canadian then you must file a notification each and every time you commence a new business activity in Canada which be filed no later than thirty days after the implementation of the investment.

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