July 28, 2016
Illegal cancellation fees

With so many options for better deals and more efficient water heaters these days, there are plenty of reasons why you might want to switch your tank and change providers.

Unfortunately, some rental companies attempt to charge customers additional cancellation fees that they never warned you about, and you never agreed to. These fees can be unpredictable but can be in excess of $1,000.

Many of these fees are illegal, and you are under no obligation to pay them. What’s more, you are not alone in facing this. Shady practices of some rental water heater companies have become well-known and documented in Ontario. In fact, they are some of the most frequent consumer complaints to the Ontario consumer services ministry.

Does this apply to me?

This advice applies to you if you have what the Consumer Protection Act calls a “Part IV” rental contract. Your contract qualifies as Part IV if any one of the following apply:

The contract does not state a set rental rate
The contract does not state a fixed term
The contract does not state what the total payments will be over the term (rates varying year to year)
The contract was never signed or otherwise legally acknowledged by you

AND all of the following apply:

Payments to your old provider are up to date
Your new contractor is returning your old tank
Your old tank has only been subject to normal wear and tear

Consumer protection law in Ontario states that, other than what we have identified above, you should not be subject to any fee, penalty or equipment buy out charge when you return your old rental water heater.*

How can I recognize illegal fee charges?

Depending on the company, these fees may go by different names, such as a “cancellation fee,” “account closure fee,” or “buyout fee.” No matter what the company calls it, it is important to evaluate yourself whether this charge is justified based on the criteria listed above.

What can they legally charge me for?

Bear in mind that water heater rental companies are within their rights to ask for some types of payments at the time of cancellation. These fees you can legally be charged when you end a water heater rental contract are the following:

  • A standard account closure fee
  • Any outstanding payments on the current contract being canceled, due on or before the day of cancellation
  • A tank return fee (if your old provider is returning it for you)
  • Any fees associated with unreasonable or excessive wear on the old tank
What can I do if I’m being charged illegal fees by my old rental company?

First, don’t panic. Share the invoice or letter you received with your new rental company and ask them what they can do to help you. Often your new contract will include the takeover of responsibility by the new company to resolve disputes with the old one. The new company wants your business, and there is nothing wrong with asking them for help in making that transition easier. Hy-Markprovides this support to all of our rental water heater customers and has legal representation to fight the old company at no cost to you.

If your new water heater provider is not giving you enough help, you can also write a complaint letter to the business. Make sure you outline that you are refusing to pay the charges and cite your rights under the Consumer Protection Act as justification. Then, file your own consumer complaint with the Ontario Ministry of Government and Consumer Services so that the issue is flagged with authorities. The ministry’s website has instructions on how to make complaints against businesses.

How do I protect myself in a new rental contract?

If you are going to rent your new water heater as well, your new contract is the opportunity to set yourself up for no surprise illegal charges in the future. Make sure your new contract meets the following criteria:

  • Says what the rate is and what it will be going forward
  • Signed, with terms and conditions
  • Full financial disclosure including the total amount to be paid over the term
  • This advice should arm you against those water heater rental companies using illegal tactics to get your money.

    Interested in a new water heater rental?

    Hy-Mark can supply any type you need and lower the monthly rate you pay. Installation and removal of the old heater are completely free. We will also represent you and advocate on your behalf against your old company. Don’t stay in an old contract when there are better deals out there! View our complete offer.

    * Section 40(2)4 of Ontario Regulation 17/05 under the Consumer Protection Act of 2002

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