Written by Consumer Protection BC’s enforcement inspector
Are you planning to have some work done on your home? Perhaps have a new roof or driveway installed? One of the things you may want to consider is whether a deposit is required to seal the deal. Deposits are fairly standard and the amount can vary from business to business. However, be cautious if the business requires what seems to be an unreasonably large deposit or requests payment in cash. These may be warning signs of future trouble so if you’re not feeling comfortable, follow your gut.
What is a direct sales contract?
A direct sales contract is a contract that is entered into at a place other than the supplier’s permanent place of business. They are also referred to as door-to-door sales contract. Here are some examples of a direct sales contract:
- Work on your home or property such as tree work, window cleaning, or driveway paving
- The sale of a specific item such as a vacuum cleaner
If your contract is a direct sales contract, the Consumer Contracts Regulation specifies how much a business is allowed to charge for a deposit.
What do you need to know about deposits?
With a direct sales contract, your down payment can’t be more than $100 or 10% of the total price – whichever one is less. So if the total estimated price of the work is $2,000, your deposit can’t be more than $100. In this case, 10% of $2,000 is $200 so $100 is what the business is allowed to charge as a deposit. If you are charged more than the allowable maximum, the contract is not binding and you have the right to cancel and receive a full refund.
Consider the following tips before you make a decision:
Before handing over your hard-earned money, be sure you’re happy with the business you’re considering for the job. Do some background checks or ask the business to provide some references. If the business does require you to put down a deposit, ask questions such as:
- What their policies are around deposits and, specifically, are they refundable?
- Will you get your deposit back if you simply change your mind?
- Will you get your deposit back if the business is unable to provide the services for some reason?
- If the business has already purchased the required materials for the job, but you want to back out of the contract before the actual work starts, how much of your deposit, if any, will be returned?
And don’t forget to read your contract carefully first! Taking these steps before you pay will help to ensure peace of mind and a mutually satisfactory experience for you and the business. I hope next time you get into any direct sales situation whether it’s for work around your house or a product, remember some of these tips to protect yourself!
Don’t buy into a home renovation scam!
Salesperson at your door? Know your rights!
Consumer Question: how can I tell if a contractor is legit?
Everything you ever wanted to know about door-to-door sales…