Laurel Banfield has a problem with her contract for home phone, cable TV and high-speed internet services — she didn't even know she had one.

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Laurel Banfield was unaware that she was entering a 12-month verbal contract when she agreed to accept discounts from her service provider. (CBC)

The company won't give her anything in writing about it, and she is locked in for another eight months.

"It'd just be nice to have something in writing showing my obligations as a customer to Rogers," Banfield said.

Last year, after she saw her bill go up a couple of times, Banfield called Rogers.

The agent applied some discounts to her services. That's where the problem started.

By agreeing to those discounts, Banfield unwittingly entered into a contract. She says she’s since been told that the cancellation fees to get out of it are $60 per month. So she’s staying with Rogers until September.

"I guess I keep paying them until they tell me I don't have to," Banfield said.

New consumer protection law

Banfield isn't the only person to get frustrated about tangly contract situations and unexpected fees.

Last year, the provincial government decided to take action to aid consumers.

The result, Bill 6, is aimed at making contracts easier to understand.

"A lot of consumers buy these contracts, and they're not really sure what they're getting into and how, the length of period they're going to be into it," Service NL Minister Nick McGrath said.

Bill 6 passed the house of assembly in April, and got royal assent in June. It came into effect on Sept. 27.

It is not retroactive, however. If a consumer signed their contract prior to Sept. 27, they are not covered by the new rules.

Bill 6 does apply to any contract signed since then.

How the new law works

Here are some highlights about what the companies are now required to do:

Who to call

For inquiries about the new law, call Service NL's consumer affairs division at 729-2600 or toll-free at 1-877-968-2600

  • Contracts must be written in plain language, which is clear and concise;
  • Contracts must be provided in paper form;
  • Fixed-term contract cancellation fees are capped at either $50, or the remaining portion of any discount offered on equipment. For example, a consumer signs a three-year contract for a $600 iPhone, but gets it for free. If they decide to end the contract a year early, they would be on the hook for $200 – the pro-rated portion of the phone’s value.

Under the law, the province can go to court on behalf of the consumer.

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Nick McGrath is the minister for Service NL, the department that oversees Bill 6. (CBC)

And there is also the possibility of fines for those who don't comply with the act.

But McGrath says it's rare for that to happen.

"Normally if we have a complaint from a customer and we go to the service provider, 99.9 per cent of the time it will be resolved within that route," McGrath said.

Industry reaction to Bill 6

But the industry says it was already making some of these changes, such as plain-language contracts.

Bernard Lord, president of the Canadian Wireless Telecommunications Association, warns about the perils of too much red tape.

"We don't want to see overregulation, because when you overregulate, then you can prevent businesses from bringing in innovation that actually benefits consumers," Lord told CBC News.

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Bernard Lord is president of the Canadian Wireless Telecommunications Association. (CBC)

Newfoundland and Labrador is one of a number of provinces that have either passed a law like this, or has plans to do so in the works.

Lord says the industry wants Ottawa to step in, and create one set of regulations for the whole country. That’s something the CRTC is now looking at doing.

"If every province adopts rules that are slightly different than the other provinces, with their own little modification, it simply adds costs, and those costs are passed on to consumers," Lord said.

He notes that the telecommunication sector has been a federal responsibility all the way back to the days of the telegraph.

Lord says 27 million people have wireless devices in Canada; the country has one of the highest penetrations of smart phones and tablets in the world.

Old rules, big cancellation fees

Martin Sevigny is one of those 27 million people.

But the number 27 million is not top of mind for him — it’s $28 or $29. That's how much he's been paying a month for a phone he doesn't use any more.

Last January, he wanted to cancel the contract for his old flip phone with Bell, but the fee was nearly as much as all the remaining monthly payments combined — up front.

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Martin Sevigny was surprised to find that the cancellation fee for his old flip phone was nearly as much as making monthly payments for the 18 months remaining on his contract. (CBC)

"[I’m paying]

$28, $29 a month, and I haven't used that phone since last January," Sevigny said.

After he got a new smart phone, he put the old flip phone in a drawer, and can’t even find it now.

"So I'm in my 13 months of paying for no service, and I've got five more months left."

He falls under the old rules — Bill 6 doesn't help him, although he agrees with the intention of the new law.

"I think it's a very good idea, but at the same time ... I did not know the fine details of that law, and I think maybe that's not been communicated well enough for the average consumer," Sevigny said.

Service NL Minister Nick McGrath says the department expects to post more information about the new law on its website soon.