BILL NO. 43
(as introduced)
1st Session, 62nd General Assembly
Nova Scotia
63 Elizabeth II, 2014
Direct Sellers' Regulation Act
(amended)
The Honourable Mark Furey
Minister of Service Nova Scotia
First Reading: April 8, 2014
Second Reading: April 22, 2014
Third Reading: April 29, 2014 (WITH COMMITTEE AMENDMENTS) (LINK TO BILL AS PASSED)
Explanatory Notes
(a) adds a definition of "continuing-services contract";
(b) expands the definition of "direct selling";
(c) deletes the definitions of "merchant" and "recognized retail store";
(d) updates the title of the minister responsible for the Act;
(e) clarifies that a salesperson can only be an individual, not a corporation or other artificial person; and
(f) confirms that neither the listing of a seller in a telephone or other directory nor the existence of a seller's webpage amounts to a solicitation for the purpose of one aspect of the definition of "direct selling".
Clause 2 provides that the prohibition on carrying on the business of direct selling without a permit does not apply to a salesperson authorized to act on behalf of a permit holder and requires that a person engaged in the direct selling of hearing aids or hearing-aid services hold a permit as a salesperson.
(a) clarifies that the Direct Sellers' Regulation Act does not apply to certain kinds of sales contracts generally (rather than not applying to certain kinds of direct sales);
(b) removes exemptions from the Act that pertain to sales regulated by other statutes and merchants (as previously defined by the Act);
(c) clarifies that the purchase of goods or services to be used in businesses are exempt from the application of the Act; and
(d) provides that the Act does not apply to any class of direct sales contracts that is prescribed by the regulations.
Clause 4 repeals a provision that exempts certain contracts for the sale of food and drink from the application of the Act.
Clause 5 provides that the prohibition on selling or offering for sale or soliciting orders for the future delivery of goods or services of any class or sort other than those specified in a permit does not apply to a salesperson unless the salesperson is engaged in the direct selling of hearing aids or hearing-aid services.
(a) clarifies that the issuance of a permit is dependent upon satisfying the conditions required by both the Act and the regulations;
(b) provides the grounds for which the Registrar may refuse an application for a permit;
(c) allows the regulations to specify a different term during which a permit is valid other than the one-year period prescribed by subsection 9(2) of the Act; and
(d) clarifies that a person whose permit is cancelled must wait one year before applying for a new permit.
Clause 7 removes the requirement that a change of employment of a salesperson be reported to the Registrar.
(a) deems a salesperson who is not required to hold a permit to be an agent of the direct seller on whose behalf the salesperson is acting; and
(b) prohibits a salesperson from selling goods or services of a class other than that specified in the permit of the direct seller for whom the salesperson is acting.
Clause 9 limits the application of a provision that provides for the cancellation of a salesperson's permit upon ceasing to represent a direct seller to salespersons who actually hold permits.
Clause 10 precludes a limited partnership from applying for and obtaining a direct seller's permit.
Clause 11 governs the circumstances under which the Registrar may suspend or cancel a permit.
Clause 12 clarifies that the requirement for a salesperson whose permit is cancelled and who is appointed by another direct seller or re-appointed by the salesperson's previous direct seller to apply for a new permit only applies to salespersons engaged in the direct selling of hearing aids or hearing-aid services.
Clause 13 governs the duration and extension of continuing-services contracts.
Clause 14 governs the cancellation of continuing-services contracts and contracts between multi-level marketing distributors and multi-level marketing wholesalers in relation to multi-level marketing plans.
Clause 15 updates a cross-reference by adding references to provisions being enacted by this Bill.
Clause 16 provides that a direct seller's right to recover or retain reasonable compensation exists notwithstanding the requirement that the direct seller refund all money received under the contract to the purchaser upon the cancellation of the direct sales contract.
Clause 17 expands the provisions of the Act that apply, and the circumstances under which such provisions apply, to sales by persons who are not carrying on the business of direct selling and who are not required to hold a permit for direct selling.
Clause 18 provides for the forfeiture of a bond delivered under the Act if the person in respect of whose conduct the bond is conditioned is convicted of a federal offence in relation to competition or deceptive marketing practices or if the Registrar is satisfied that the person has contravened the Act or the regulations.
Clause 19 governs the making and enforcement of compliance orders and the publication of information by the Registrar.
Clause 20 makes it an offence for persons to falsely hold themselves out as representing a direct seller.
Clause 21 prohibits direct sellers and salespersons from establishing, operating, advertising or promoting a pyramid sales scheme.
Clause 22 governs the assignment of a direct seller's rights under a direct sales contract and limits the liability of the Crown and others when performing duties or exercising powers under the Act, if done in good faith.
(a) adds regulation-making powers incidental to the amendments made by this Act;
(b) adds regulation-making powers respecting what constitutes the usual place of business of a seller for the purpose of the definition of "direct selling";
(c) adds regulation-making powers respecting the qualifications of salespersons and applicants for a salesperson permit;
(d) adds regulation-making powers respecting the return of goods upon the cancellation of a direct sales contract and the reasonable compensation that a direct seller is entitled to recover for goods that cannot be returned or for services already provided under a cancelled contract;
(e) adds regulation-making powers to authorize the Registrar to alter the amount of the bond posted by an applicant for or a holder of a direct seller permit; and
(f) allows the regulations to adopt or incorporate by reference any written standard, rule, regulation, guideline, designation, code or document.
Clause 24 expands the offences for which a person may be found guilty under the Act and the penalties to which an offender may be subject.
Clause 25 extends the limitation period for prosecuting an offence from two years to three years.
Clause 26 updates the references to courts and removes an outdated cross-reference to the Summary Proceedings Act.
Clause 27 provides for the coming into force of this Act.
An Act to Amend Chapter 129
of the Revised Statutes, 1989,
the Direct Sellers' Regulation Act
1 Section 2 of Chapter 129 of the Revised Statutes, 1989, the Direct Sellers' Regulation Act, as amended by Chapter 8 of the Acts of 1999, is further amended by
(a) adding "(1)" immediately after the Section number;
(b) relettering clause (a) as (aa) and adding immediately before clause (aa) the following clause:
(B) by telephone or other personal communication, and any resulting sale is negotiated or entered into at a place other than in person at the seller's usual place of business in the Province,
(ii) in response to a request made by a prospective purchaser, if the request was itself solicited by or on behalf of the seller and any resulting sale is negotiated or entered into at a place other than in person at the seller's usual place of business in the Province,
(iii) if the seller does not operate a retail outlet in the Province and solicits, advertises or otherwise requests prospective purchasers to present themselves at a dwelling, hotel, motel or temporary or short term establishment where the seller sells or offers for sale or solicits orders for future delivery of goods or services,
(iv) by a multi-level marketing wholesaler or a multi-level marketing distributor, or
(v) if the goods or services are hearing aids or hearing-aid services, regardless of the circumstances of the sale.
(e) striking out "Consumer Affairs" in the first and second lines of clause (h) and substituting "Service Nova Scotia";
(g) striking out "a person" in the first line of clause (l) and substituting "an individual"; and
(h) adding the following subsection:
2 Section 5 of Chapter 129 is repealed and the following Section substituted:
(a) the holder of a permit under this Act; or
(b) a salesperson authorized by the holder of a permit as a direct seller to act on the permit holder's behalf.
(2) An individual engaged in the direct selling of hearing aids or hearing-aid services must hold a permit as a salesperson.
3 Subsection 6(1) of Chapter 129 is amended by
(a) striking out "a direct" in the first line and substituting "any";
(c) striking out clause (g) and substituting the following clause:
(d) striking out clause (h) and the "or" following clause (h);
(e) striking out the period at the end of clause (i) and substituting "; or"; and
(f) adding immediately after clause (i) the following clause:
4 Section 7 of Chapter 129 is repealed.
5 Section 8 of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by adding immediately after subsection (4) the following subsection:
6 (1) Subsection 9(1) of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by
(a) striking out "Upon" in the first line and substituting "Subject to subsection (1A), upon"; and
(b) adding "this Act and" immediately following "by" in the fourth line.
(2) Section 9 of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by adding immediately after subsection (1) the following subsection:
(a) the applicant or any director, manager or officer of the applicant
(B) an enactment of another province of Canada, of Canada or of a foreign jurisdiction,
for conduct that shows, in the Registrar's opinion, that the applicant is unfit to hold a permit,
(ii) has contravened or failed to comply with this Act or the regulations,
(iii) has failed to comply with the requirements of any applicable enactment of the Province, of another province of Canada or of Canada,
(iv) has engaged in a pattern of conduct that shows, in the Registrar's opinion, that the applicant is unfit to have a permit,
(v) has made a material misstatement in the application for a permit, or
(b) the circumstances are such that, in the Registrar's opinion, it would not be in the public interest to issue a permit.
(3) Subsection 9(2) of Chapter 129, as enacted by Chapter 8 of the Acts of 1998, is amended by striking out "longer period as specified in" in the second line and substituting "other period prescribed by".
(4) Subsection 9(5) of Chapter 129, as amended by Chapter 8 of the Acts of 1998, is further amended by adding "apply for" immediately after "to" in the second line.
7 Clause 13(b) of Chapter 129 is repealed.
8 Chapter 129 is further amended by adding immediately after Section 15 the following Section:
(2) No salesperson shall sell or offer for sale or solicit orders for the future delivery of goods or services of any class or sort other than those specified in the permit of the direct seller on whose behalf the salesperson is acting.
9 Subsection 16(1) of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by adding "who is the holder a permit under this Act" immediately after "salesperson" in the first line.
10 Section 17 of Chapter 129, as amended by Chapter 8 of the Acts of 1998, is further amended by adding immediately after subsection (2) the following subsection:
11 Subsection 18(2) of Chapter 129 is repealed and the following subsection substituted:
(a) has failed to comply with any of the terms, conditions or restrictions to which the permit is subject;
(b) has made a material misstatement in any information or material submitted by the permit holder to the Registrar;
(c) has been found guilty of misrepresentation, fraud or dishonesty;
(d) has demonstrated the permit holder's incompetency or untrustworthiness to carry on the business in respect of which the permit was issued;
(e) is not carrying on business in the Province; or
(f) being a corporation, has been dissolved or struck off the register of companies.
12 Subsection 19(2) of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by adding "engaged in the direct selling of hearing aids or hearing-aid services" immediately after "salesperson" in the first line.
13 Chapter 129 is further amended by adding immediately after Section 20 the following Section:
(2) Where a continuing-services contract is about to expire, the direct seller shall, between thirty and sixty days before the expiry date of the contract, provide written notice to the purchaser stating
(a) the date that the contract is set to expire, and that this notice is written notice that the contract will terminate on that date; or
(b) the date that the contract is set to expire, but that the contract will be automatically extended, on a monthly basis and on otherwise the same terms as at present, until either the purchaser or the direct seller gives notice to the other that the contract is not to be further extended.
(3) On the expiry date of a continuing-services contract, where
(a) notice has been given to the purchaser under subsection (2); and
(b) neither the direct seller nor the purchaser has given notice to the other that the contract is not to be extended,
the contract is automatically extended, on the same terms, for an additional one-month term, and the direct seller shall continue to automatically extend the contract, for additional one-month terms, until either the supplier or the customer gives notice to the other that the contract is not to be further extended.
(4) No direct seller shall charge a purchaser a fee for the extension of a continuing-services contract or any other fee, charge, penalty, interest or other amount or consideration for the extension of a contract under this Section.
(5) For the purpose of subsection (1), all continuing-services contracts, except a contract extended under subsection (3), that
(a) are in effect between the same direct seller and the same purchaser at the same time; and
(b) provide for the performance of the same or similar services,
are deemed to be a single contract, regardless of whether services are being supplied concurrently under two or more of the contracts.
(6) Where a continuing-services contract does not comply with subsection (1),
(a) the contract is not binding on the purchaser in respect of the period in excess of two years;
(b) the direct seller shall refund to the purchaser, within fifteen days after receiving a request from the purchaser, all money paid under the contract for the period in excess of two years; and
(c) where the direct seller does not comply with clause (b), the purchaser may recover as a debt due all money paid under the contract for the period in excess of two years.
14 Chapter 129 is further amended by adding immediately after Section 21 the following Sections:
(2) A notice given pursuant to subsection (1) may be served on the direct seller in any manner that permits the purchaser to produce evidence that the purchaser cancelled the contract, including registered mail or personal delivery to the direct seller's last known address.
(3) Where a method of sending or delivering the cancellation notice other than personal delivery is used, a notice of cancellation is deemed to be given when sent.
(4) For greater certainty, where a purchaser cancels a continuing-services contract under subsection (1), Sections 22 and 23 apply.
21B (1) In addition to the cancellation rights provided for by Section 21, a contract between a multi-level marketing distributor and a multi-level marketing wholesaler in relation to a multi-level marketing plan may be cancelled by the multi-level marketing distributor at any time for any reason by giving written notice to the multi-level marketing wholesaler.
(2) A notice given pursuant to subsection (1) may be served on the multi-level marketing wholesaler in any manner that permits the multi-level marketing distributor to produce evidence that the multi-level marketing distributor cancelled the contract, including registered mail or personal delivery to the multi-level marketing wholesaler's last known address.
(3) Where a method of sending or delivering the cancellation notice other than personal delivery is used, a notice of cancellation is deemed to be given when sent.
(4) Where a multi-level marketing distributor cancels a contract under subsection (1), Sections 22 and 23 apply mutatis mutandis.
16 Subsection 23(5) of Chapter 129, as enacted by Chapter 8 of the Acts of 1999, is amended by
(a) striking out "A" in the first line and substituting "Notwithstanding subsection (1), a"; and
(b) adding "or retain" immediately after "recover" in the first line.
17 Section 25 of Chapter 129 is repealed and the following Section substituted:
18 Section 26 of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by
(a) striking out the semicolon at the end of subclause (a)(ii) and substituting ", or";
(b) adding immediately after subclause (a)(ii) the following subclause:
(c) striking out "violated" in the first line of subclause (d)(i) and substituting "contravened"; and
(d) adding "or the regulations" immediately after "Act" in the first line of subclause (d)(i).
19 Chapter 129 is further amended by adding immediately after Section 29 the following Sections:
(2) A compliance order shall
(a) name the person in respect of whom the order is issued;
(b) describe the person's act or practice that is contravening, is about to contravene or has contravened this Act or the regulations;
(c) identify the provision of this Act or the regulations that is being contravened, is about to be contravened or has been contravened; and
(d) be dated and signed by the Registrar.
(3) In a compliance order, the Registrar may order a person to stop engaging in or to not engage in a specified act or practice and to comply with this Act and the regulations.
(4) The Registrar shall serve a copy of the compliance order on the person named in the order.
29B (1) Where the Registrar is satisfied that a person in respect of whose conduct a compliance order has been issued is not complying with the order, the Registrar may apply to the Supreme Court of Nova Scotia for an order directing the person to comply with the compliance order.
(2) Upon hearing an application of the Registrar made under subsection (1), the Supreme Court may make any order that the Court considers necessary, in addition to the order directing the person to comply with the compliance order.
29C (1) The Registrar may publish any of the following information, including personal information as defined in the Freedom of Information and Protection of Privacy Act:
(a) the name and business address of a permit holder;
(b) any information appearing on a permit;
(c) any information relating to the status of a permit issued under this Act, including the suspension or cancellation of a permit;
(d) details of any compliance order issued under Section 29A;
(e) details of any court order made under this Act;
(f) details of any conviction for an offence under this Act;
(g) any other information prescribed by the regulations.
(2) The Registrar may publish the information referred to in subsection (1) in whatever form and manner the Registrar considers appropriate.
20 Chapter 129 is further amended by adding immediately after Section 31 the following Section:
21 Chapter 129 is further amended by adding immediately after Section 32 the following Section:
(2) No direct seller or salesperson shall establish, operate, advertise or promote a scheme of pyramid selling.
22 Chapter 129 is further amended by adding immediately after Section 34 the following Sections:
(2) The liability of the assignee is limited to the total amount owing to the direct seller at the date of assignment under the direct sales contract.
34B No action or other proceeding may be brought against Her Majesty in right of the Province, the Minister, the Registrar, any person acting under the authority of the Registrar or any other employee or agent of Her Majesty in right of the Province for anything done or not done, or for any neglect,
(a) in the performance or intended performance of a duty under this Act or the regulations; or
(b) in the exercise or intended exercise of a power under this Act or the regulations,
23 Section 35 of Chapter 129, as amended by Chapter 8 of the Acts of 1998 and Chapter 8 of the Acts of 1999, is further amended by
(a) adding "(1)" immediately after the Section number;
(b) relettering clause (a) as (af) and adding immediately before clause (af) the following clauses:
(aa) prescribing classes of direct sales contracts to which this Act does not apply;
(ab) prescribing categories of persons exempted from the application of this Act;
(ac) prescribing categories of sales exempted from the application of this Act;
(ad) prescribing the period during which a permit is valid;
(ae) respecting the qualifications, education and training that a salesperson or an applicant for a permit as a salesperson must possess, and the testing and other requirements that a salesperson or an applicant for a permit as a salesperson must pass or satisfy, including authorizing the Registrar to determine or approve the qualifications, education and training that a salesperson or an applicant for a permit as a salesperson must possess and the testing and other requirements that a salesperson or an applicant for a permit as a salesperson must pass or satisfy;
(c) adding immediately after clause (e) the following clauses:
(eb) prescribing information that may be published by the Registrar for the purpose of Section 29C;
(d) adding immediately after clause (he) the following clauses:
(heb) respecting the content and form of notices required under Section 20A;
(e) striking out clause (hh) and substituting the following clauses:
(hha) respecting the return of goods to a direct seller by the purchaser upon the cancellation of a direct sales contract, including
and
(f) adding the following subsections:
(3) A standard, rule, regulation, guideline, designation, code or document that is adopted or incorporated by reference under subsection (2) may be adopted or incorporated as it reads on a prescribed day or as it is amended from time to time.
(4) Where a standard, rule, regulation, guideline, designation, code or document is adopted or incorporated by reference under subsection (2), the Minister shall ensure that a copy of the standard, rule, regulation, guideline, designation, code or document is made publicly available.
24 Section 36 of Chapter 129 is repealed and the following Section substituted:
(a) contravenes this Act or the regulations;
(b) fails to comply with a compliance order or fails to do anything required by the Registrar under this Act or the regulations;
(c) knowingly furnishes false information in any application, statement, information or material required to be provided or submitted under this Act or the regulations; or
(d) fails to comply with a term, condition or restriction to which the person's permit is subject.
(2) Subject to subsections (3) and (4), every person who is guilty of an offence under this Act is liable on summary conviction to a fine of not less than five hundred dollars and not more than twenty-five thousand dollars or to imprisonment for a period of up to two years, or to both a fine and imprisonment.
(3) Subject to subsection (4), where a corporation is convicted of an offence under this Act, the corporation is liable to a fine of not less than one thousand dollars and not more than three hundred thousand dollars.
(4) Where a person is guilty of an offence for having contravened Section 5 or having failed to comply with a compliance order, the minimum fine that may be imposed upon the person is
(ii) in the case of a corporation, five thousand dollars; and
(c) for a third or subsequent offence
(5) Where a person is convicted of an offence under this Act and the court is satisfied that, as a result of the commission of the offence, a monetary benefit has accrued to the offender, the court may order the offender to pay, in addition to a fine imposed under this Section, a fine in an amount equal to the estimation by the court of the amount of the monetary benefit.
(6) Where an offence under this Act is committed or continued on more than one day, the person who committed the offence is liable to be convicted for a separate offence for each day on which the offence is committed or continued.
(7) Where a corporation is guilty of an offence under this Act, a director, officer, manager or agent of the corporation who directed, authorized, permitted, acquiesced in or participated in the contravention is also guilty of an offence and is liable on summary conviction to the penalties set out in subsections (2) and (4), whether or not the corporation has been prosecuted or convicted.
25 Section 38 of Chapter 129 is amended by striking out "two" in the second line and substituting "three".
26 (1) Subsection 39(1) of Chapter 129 is amended by
(a) striking out "county court" in the third line and substituting "Supreme Court of Nova Scotia"; and
(b) striking out "accordance with the Summary Proceedings Act" in the fifth line.
(2) Subsection 39(4) of Chapter 129 is amended by
(a) striking out "Appeal Division of the Supreme Court" in the first and second lines and substituting "Nova Scotia Court of Appeal";
(b) striking out "county court" in the second line and substituting "Supreme Court of Nova Scotia"; and
(c) striking out "Appeal Division" in the fourth line and substituting "Court of Appeal".
27 (1) This Act, except Section 24, comes into force on such day as the Governor in Council orders and declares by proclamation.(2) Section 24 has effect on and after July 1, 2014.
This page and its contents published by the Office of the Legislative Counsel, Nova Scotia House of Assembly, and © 2014 Crown in right of Nova Scotia. Created May 1, 2014. Send comments to legc.office@novascotia.ca.
