Ontario Towing Industry on the Cusp of Major Changes

Ontario Towing Industry on the Cusp of Major Changes

Ontario Towing Industry on the Cusp of Major Changes

The enacting of Bill 15 in Ontario will without a doubt drive many changes in the way the towing industry does business.

What is happening?

New rules under the Repair and Storage Liens Act (RSLA) take effect on July 1, 2016, and January 1, 2017. This fact sheet highlights keys changes to help those impacted become aware and prepared. The overall changes are outlined in Part I (Sections 3 and 4) and Part V (Sections 27 and 32) of the RSLA, and O. Reg. 427/15 General under the RSLA.

Who is impacted by the new RSLA rules? 

The new RSLA rules apply to an individual or company that repairs or stores a motor vehicle (and who claims a lien as a “repairer” or “storer”). 

What changes on July 1, 2016?

The following new rules came into effect on July 1, 2016:

  • If a vehicle being stored is subject to a lien and is received from someone other than its owner or a person having the owner’s authority*, then the storer must give notice to the owner and other interested parties of the lien in writing (e.g. secured parties who have registered their interest, such as lease and finance companies).

For vehicles registered in Ontario, the notice period is reduced from 60 days to 15 days after the day after the vehicle is received. If notice is not provided within 15 days, a storer’s lien is limited to the unpaid amount owing for that period. (The 60-day notice period remains unchanged for out-of-province vehicles.)

  • Storers now have the option to give written notice by fax or e-mail. Previously, notice had to be given personally, sent by certified or registered mail, or prepaid courier. These options continue to be available.
  • If no amount has been agreed upon for repair and storage costs, fair value may be determined by a court. There is a new list of discretionary factors a judge will be required to consider (e.g. fixed costs, variable costs, direct costs, indirect costs, profit and any other relevant factors).

*Someone may act on behalf of a consumer if the consumer is unable to give authorization as a result of the circumstances that required the tow and/or towing services, or if the consumer has been removed from the scene of an accident.

What changes on January 1, 2017?

All tow truck companies must be registered under CVOR. License plates will not be renewed without a valid CVOR number and any offending companies will be subject to fines.

Some of the RSLA rules will relate to new rules under the Consumer Protection Act (CPA), and come into effect on January 1, 2017. The CPA changes will require towing and storage service providers to:

  • Get permission from a consumer or someone acting on behalf of the consumer (e.g., in the event a consumer has been removed from the scene of an accident) before providing or charging for towing and storage services.
  • Record the name and contact information of the consumer or the person giving the authorization, along with the date and time of authorization.
  • Disclose certain information, in writing, such as the provider’s business name, contact information, and address where the vehicle will be towed.
  • Make a current statement of rates available at all business premises, on a website (if one is maintained) in a form that can be reproduced, and give a copy to any person upon request.
  • Provide an itemized invoice, listing services provided, the cost for each service and the total cost before demanding or receiving payment.
  • Accept credit card payments from consumers (and not insist on cash only).
  • Provide a consumer (or someone acting on their behalf) with access to the towed vehicle, at no charge, so that they may remove personal property between 8 a.m. and 5 p.m. on business days.
  • Prohibit tow and storage providers from recommending repair and storage facilities, legal service providers or health care service providers, unless a consumer or a person acting on their behalf specifically asks, or the provider offers to make a recommendation and that person agrees.
  • Disclose to a consumer whether the provider is getting a financial reward or incentive for towing a vehicle to a particular storage or repair shop.
  • Establish minimum insurance coverage including general liability insurance of $2 million, customer vehicle insurance of $100,000 and $50,000 cargo insurance.
  • Maintain authorization and disclosure records, invoices, copies of insurance policy, and statements of rates for three years.

Some exemptions will be made for certain tow and storage providers. For example, certain disclosures, authorization, invoices, and related record-keeping requirements will not be required if services are provided under a prepaid agreement or membership in an association, such as the Canadian Automobile Association (CAA) where the consumer is not being charged for the specific service being provided. These exemptions will also apply when the tow and storage services are provided when a vehicle is purchased or leased and the consumer is not charged for the specific service being provided.

In addition, when a vehicle is towed and stored for law enforcement purposes or detained or impounded under other statutes, regulations or municipal by-laws, or as a result of a lawful power of seizure, a limited number of the new rules will apply. While these tows are not initiated by a consumer, the consumer is generally responsible for charges. The new regulation will protect the consumer, for example, by requiring the provider to make available publicly a current statement of rates, post identifiers and other information, and provide the consumer with the option to pay by credit card.

Maximum Lien for Tow and Storage Services

The maximum amount of a lien for tow and storage services may be subject to restrictions under the CPA. 

  • A tow and storage provider cannot charge a greater amount just because the cost is to be paid by an insurer or another third party, or is being impounded or detained for law enforcement purposes. (This rule does not apply in the case of law enforcement, if there is an agreement in place that contains terms of payment.)
  • If an authorization includes an estimate, the amount charged may not exceed it by more than 10 per cent. However, the consumer or a person acting on their behalf can agree to change the estimate if they require additional or different services.

What tow service providers should do before January 1, 2017?

All tow operators in Ontario must hold a valid CVOR (Commercial Vehicle Operators Registration) certificate by January 1, 2017. If you do not already hold a valid CVOR certificate, you are urged to meet this new requirement by the January 1, 2017 deadline. You can find the CVOR certificate application form online at CVOR certificate application form or contact 1-416-246-7166 ext. 6300 or 1-800-387-7736 ext.6300 (within Ontario) or visit the MTO’s website for more information.