Fraud Prevention Month Case #4: It was a chilly January. The phone rang as Brian and his wife Emily were finishing dinner. The caller was Tom from Smith’s Heating & Gas. Would Brian be interested in having their air ducts cleaned along with a free furnace inspection? Since their furnace was 12 years old, Emily and Brian decided to take Smith’s Heating & Gas up on their offer. Jerry arrived the next day to clean the air ducts and to inspect the furnace. Within minutes, he discovered that Brian had a cracked distributor, which was allowing poisonous carbon monoxide gas to flood their house. Jerry turned off the gas, disconnected the furnace, and phoned his boss David.
David arrived at Brian and Emily’s house that same day. He told them that they needed a new furnace and that he could supply one for $4,400.00 installed, provided they pay him $2,200.00 up front. Brian agreed and signed the contract. He paid by cheque because Smith’s Heating & Gas did not take credit cards and was told that the furnace would be installed three days later on Saturday.
Saturday came, but no furnace installer showed up. Brian phoned David who told him that something had come up, but that the furnace would be installed the next Friday. Next Friday came, but no installer. By this time, Brian and Emily were worried. It was getting colder, they had no heat, and David had their money. Brian phoned David and told him they wanted to cancel the contract and wanted a refund. David started swearing at Brian, telling him that there would be no refund, and that if they didn’t like it, they could sue him.
WHAT WOULD YOU DO?
In this case, it is questionable whether the consumer even had a problem with their furnace. What is clear is that Smith’s Heating & Gas broke the law. Consumer Protection BC issued a Compliance Order against the company, ordering them to comply with the law and refund the consumer’s deposit. When the company did not do so, Consumer Protection BC placed a lien on David’s house. The court has since ordered that David’s house be sold to pay off this and other liens.
Under the Business Practices and Consumer Protection Act, the above contract qualifies as a direct sales contract because it was entered into at a place other than the supplier’s permanent place of business. Door-to-door sales are examples of direct sales contracts.
By law, it is illegal to take a 50% deposit under a direct sales contract. If the seller accepts such a large deposit, the direct sales contract is not binding on the consumer. Also, a direct sales contract can be cancelled for any reason within 10 days of the consumer receiving a copy of the contract. Direct sales contracts may even be cancelled one year after the consumer receives a copy of the contract if the contract does not contain certain elements, such as a notice of the consumer’s rights of cancellation.
TIPS: Before allowing any tradesperson into your home, check out the company to see if it is legitimate and whether there have been any consumer complaints against it. Consumer Protection BC and the Better Business Bureau are great places to start. Read any contract carefully before signing and ensure that you get a copy. It’s a good idea to pay using a major credit card. Never pay using cash. And always be aware of your cancellation rights.
March is Fraud Prevention Month - know your rights! If you have questions about your rights and responsibilities as a consumer in British Columbia, please contact Consumer Protection BC toll free at 1-888-564-9963, or visit or corporate website at www.consumerprotectionbc.ca. You can also follow Consumer Protection BC on Twitter @ConsumerProBC, like us on Facebook and read our blog for valuable consumer tips. The “What Would You Do?” columns are presented by Consumer Protection BC to raise consumer awareness during Fraud Prevention Month.
Links to all Fraud Prevention Month "Cases":
The Case of the Sweet Talking Swindler
The Case of the Greedy Grandson
The Case of the Loan Shark Lender
The Case of the Fraudulent Furnace Installer
The Case of the Desperate Debtor