What to do about unfair contracts?

Jackie and Robert Boone went to small claims court to fight a car rental company’s unfair contract. They were paying an extra $25 a day for a loss damage waiver, which was supposed to cover repairs if the car was in an accident.

Instead, they were charged $5,500 because the protection didn’t kick in if the car collided with a stationary object — in their case, a parking lot wall. Read about their victory here.

It’s not easy to launch a legal battle. The couple, who live in England, ended up out of pocket at the end. The company appealed the small claims court win, forcing them to hire a lawyer for the next round. Isn’t there a better way?

Unfair contracts are everywhere. Insurance companies throw in exclusions left and right. Credit card contracts are full of traps and are often amended. But the banks send you only the new clauses without any context to compare them.

Can you cross out the stuff you don’t like and substitute new terms? That may work in big-money deals for cars and homes, but rarely in transactions involving smaller sums.

Better disclosure would help. But the plain language movement is stalled. Company lawyers prefer that you don’t understand what you’re signing.

Robert Boone thinks the answer is for governments to outlaw unfair contracts. While that would be nice, I doubt the business lobbyists would ever allow that to happen.

So, for now, you have to read through the dense legalese, ask questions, shop around and, ultimately, use the legal system to fight everyday injustices.

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

7 thoughts on “What to do about unfair contracts?”

  1. I had a few contracts of this nature when I had my 33 years as a deputy judge.

    The contracts were frequently designed to confuse. Small print, too many terms to read at the signing counter, coloured paper, slight explanation, conflicts with other insurers, trying to upsell the cars, fill it up or we will charge you excessively, only credit card payments allowed, open ended credit card once it is swiped for any repairs, if there are repairs you pay till the insurers sort it out.

    You should see the glass terms. Most are a $1,000 deductible so the renter will always pay for the stone chipped new windshield.

    Car rentals are not the only offenders. I usually sided with the victim on confusing contracts, except where it was buyers’ remorse.

  2. I rent cars at times and this concerns me. I think rental companies have you over a barrel!

    I reserve a rental car and go to pick it up at the airport, probably after a long flight. If I spent 1/2 an hour reading it at the counter and interpeted it the way they do, what are my options?

    Cross out the wording I don’t like and have the clerk initial the changes? Won’t happen.

    Refuse to accept the car and go to another rental company,
    providing they have any vehicles? Read their contract and go through the same thing.

    Is there a way to view their contract before you rent their car, allowing you to make a decision before you arrive at the airport?

  3. I recently returned from a family vacation in BC, spending two nights at the Recreation Inn in Kelowna. Upon checkout, I agreed with the room charges and paid with my AmEx card.

    A few weeks later, when I returned home to Toronto, I received my AmEx statement and saw the hotel charge, but there was also an extra line item for $105, charged by the Recreation Inn.

    I called the Inn to question it and they said the charges were for damage done to the TV. I advised there was no damage. In fact, I recall watching the TV the morning I checked out, as we were looking for news of any highway closings due to the wildfires.

    The person said the manager would return my call, but to date has never called.

    Does the hotel have the right to just charge my credit card after I’ve left? Even if the TV wasn’t working when the next guest checked into that room, how can they claim I damaged it? I certainly didn’t sign anything for this, but feel I’m being cheated.

    I called AmEx to discuss, and they’ve opened up an investigation, which can take up to 6 weeks. Is there anything else I can do to fight this?

  4. Two years ago, nearly the exact same thing happened to me. I tried to enter a parking garage but learned too late that the rental van would not fit.

    Before entering the garage, I looked everywhere for the manual, but there was none, and there was not even a glove compartment in which you would normally find information and a manual. So I did not know the van’s height. Therefore, the roof got scratched up.

    When I returned the van, they noticed the damage and billed me $6,800. They kept the deductible of $1,000 from my credit card, even though they refused to honour their insurance policy.

    How can they take a deductible from me and still refuse to honour the insurance? They screwed me from both sides.

    They claimed that the insurance I bought did not cover parking garages. Therefore, I would have to pay an additional $5,800 over the $1,000 they already took.

    I refused. I told them I would not have bought the insurance if I had known they were not going to honour it. They sent me to collections and harassed me for months until I wrote to the Ministry of Consumer Affairs complaining about the collection agency and the bogus claim against me.

    However, the truck rental company has still not withdrawn their claim against me. They have refused to return the deductible, though they have not taken me to court.

    I am very suspicious that they do not actually have the right to dishonour their insurance, based upon such a ridiculous-seeming reason, i.e. parking garages are not covered. And I find it highly suspicious that they can take a deductible and then turn around and say the insurance is not valid.

    After reading your latest article, it looks like I can take the truck rental company to court and get the same ruling as the British couple. How would I know if I can get the same ruling, rather than stirring up a hornet’s nest and getting sued instead? They have left me alone for a year. Maybe I would get a completely different result from the court? And end up worse off than I am now?

    What can I do about the entry on my credit rating? They have ruined my credit rating with this. When I wrote to the Ministry of Small Business and Consumer Services to ask them to remove the credit rating entry, they refused, saying the information they have is accurate so they won’t remove it.

  5. The thing that worries me most is that it probably happens quite a lot. Those most vulnerable will be those visiting Canada from countries where their language and customs are different and they rely on a duty of care from the person behind the car rental counter.

    They will probably not know how to go about seeking a remedy from those that would misrepresent their offerings.

    It potentially gives Canada a bad reputation abroad and, in particular, all car rental companies, who may end up being tarred by the same brush.

    Even those that will exhibit the highest level of probity in their dealings with the consumer will be tarnished by this act.

    Many wouldn’t or couldn’t go through what we did in order to get Justice and our money back. I am sure this is a ‘Win some/Lose some’ strategy for unscrupulous traders.

    Some safeguards against this sort of unethical behaviour could include:

    — a standardized car rental contract, set either by an industry group or government watchdog.

    — obviously reading the entire contract (not something that many will do after a long journey to the rental agency).

    — and perhaps having a credit card with lower credit available on it.

  6. I do find it quite bizarre that the company owner would regard any accident as frivolous, instead of unfortunate.

    When he said the rental office was not dimly lit, that was ludicrous as he was not present when we picked up the rental car.

    The exclusionary provision on the rental contract was even difficult for the learned trial judge to read, despite the fact that it was highlighted for him.

    This is noted on the Trial Transcript, Reasons for Judgment, Respondents’ Compendium, Tab 6, p. 39, Lines 27-30.

  7. I think I would have to say that the bottom line for me, coming out from all of this is ‘If the Province can’t or won’t protect its visitors, then it doesn’t deserve any’. To me and many others an ‘ounce of prevention is worth more than a pound of cure’. Jackie and I paid the pound of cure. I’m not saying that we are absolved of all responsibility, but remember the circumstances of our arrival in Ontario, the lighting conditions in Advantage’s office, the obscured notice and the Branch Manager who said we were covered for everything. We had no reason at the time to believe he was lying or incompetent at his job. Certainly, we didn’t want to appear to be accusing him of those things by asking to read the contract fully, after having received his assurances.

    Only the Province can provide the ‘ounce of prevention’; insurance (if you can find legal cover outside of your country of residence) and the legal system can only provide the pound of cure. Clearer, standardized rental agreements are what’s called for, with a consumer watchdog or industry regulator looking after the interests of those who would visit Ontario and even those resident in Ontario.

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