‘Customers’ and ‘Consumers’ – does the difference matter?

DOUG CROZIER & TIM LAW

As most people in the industry know, the travel laws in Québec, Ontario and British Columbia are part of the consumer protection law of those provinces. As the reason for the existence of these laws is obvious – the protection of consumers who are buying travel services – one would think that they would be straightforward when it comes to interpreting who they apply to, and how they apply.

While that is now mostly true with respect to applications that can be made against a compensation fund, it is not the case regarding what type of business needs to obtain a licence. That is due to a lack of consistency in the words used in these statutes.

Using the Ontario law as an example, in the context of determining whether the person needs to be registered, the word “consumer” is used. When determining whether or not someone is permitted to make a claim against the compensation fund, the word “customer” is used.

Because two different words are used, the principles of legal interpretation require us to give a different meaning to each of these words. There have been disagreements over what they mean and, therefore, who is required to be registered and who is permitted to make a claim against the compensation fund.

For the traveller, the most important aspect of consumer protection is what happens with their money, either when it is supposed to be kept in trust or when it is not available to pay for travel services, but can be refunded from a compensation fund.

A number of different cases have dealt with who is considered to be a “customer” under the Ontario statute. It is now accurate to say that all funds received for travel services, whether received from an individual or corporation, are to be placed in trust and a claim can be made against the compensation fund by an individual or a corporation.

For those in the industry, however, the more important issue is whether or not registration is required. If so, all of the obligations that go along with being a registrant will apply.

Using the Ontario law again as an example, a travel agent is defined as “a person who sells, to consumers, travel services provided by another person.”

Although this definition may change in the near future, it is expected to continue to include the idea of a person who “sells, to consumers, travel services provided by another person.”
The question then, with respect to the need to be registered, is whether or not the travel agent is selling to “consumers.”

Unfortunately, as with the word “customer,” the word “consumer” is not defined in this statute. We must, therefore, look elsewhere to understand what it means. A logical place to look is in the main Consumer Protection law itself. In that statute, “consumer” is defined as “an individual acting for personal, family or household purposes and does not include a person who is acting for business purposes.”

Given the clear exclusion of “a person who is acting for business purposes” from the definition, the question becomes: is someone selling to individuals and/or corporations, who make it clear that they are buying the travel services “for business purposes,” required to register under the Ontario law? No clear answer can be found to that question in the Ontario statute or in any of the decisions that have been made by tribunals and judges in relation to it. A reasonable reading of the statute does, however, suggest that such a vendor should not be obliged to be registered.

Heifetz, Crozier, Law is a Toronto law firm that has for years represented all aspects of the Canadian travel industry. The lawyers at HCL also maintain a non-travel practice, covering litigation, real estate, Wills, corporate/commercial matters, etc. To contact HCL, email [email protected].