Monthly Archives: June 2018

If You’re a “Consumer Protection” Organization, Why Suppress Consumer Feedback?

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It seems to obvious to say a consumer protection organization should welcome consumer feedback. Like saying 2 +2 = 4.  But anyone who’s ever dealt with the Ontario government’s arms-length monopoly, Tarion Warranty Corporation, knows sometimes 2+ 2 can equal 7.

Tarion was entrusted with protecting consumers who discover construction defects in their new homes, and regulating new home builders. You’d think their lifeblood would be consumer feedback. Dialogue with consumers helps companies get constructive feedback, and fix what’s wrong.

Consumers aren’t interested in Tarion’s builder awards, golf tournaments or charity donations. They want what they paid for, a new home free of construction defects, which they’re entitled to under Ontario law.

Tarion blocks consumers on social media if they don’t like their policy critique. The Ministry who’s supposed to oversee this monopoly confuses consumers by taking the side of Tarion, backing off when Tarion says boo, or telling consumers to get a lawyer.

Who’s on the consumer’s side?

Why do we need a government warranty if their advice is to contact a lawyer?  Tarion also tells consumers ro take their cases to the License Appeal Tribunal, where consumers lose 85% of the time, or to the internal Tarion ombudsperson, who doesn’t get involved in claims, and reports to Tarion.  What good is either?

A case in point is Tarion’s recent “Annual Public Meeting” May 24th, 2018. It’s annual, but not “public” in any meaningful way.

  • It’s conducted via webcast only, with no 2-way live communication,
  • the board of directors is not introduced to the public;
  • only some pre-selected questions sent by e-mail are answered; the answers are rote and predictable, often referring consumers to websites, and some answers are misleading;
  • Each year there are technical glitches, this year the sound and video failed and left partly garbled text feeding across the screen. The Tarion-ism “conciliation“, (puzzling even when spelled correctly), was rendered ascon-sill-viation”, the computer not knowing what to make of this either.

Beware of the posturing and spin, which doesn’t give the full picture from the new home buyer perspective. For example:

1) The Chair of the board, one of 8 builders on the board, said Tarion has now “enhanced consumer protection” and “improvement in dispute resolution.” He gave no examples. No one I’ve spoken to in the last year can point to any improvements at all. Saying it’s so doesn’t make it so.

2) The internal Tarion “Consumer Advisory Council” which is supposed to inform board members of the consumer perspective, is smoke and mirrors. The Tarion Chair stated these members have vast experience” with Tarion, but they are anonymous, and can’t be contacted by consumers. A condo lawyer, a former building inspector, a real estate agent, and “consumer reps”, we are told, are part of this council. I’ve met two of these members by chance at other meetings, and found them alarmingly uninformed about Tarion. One said to me “I don’t know anything about Tarion, I haven’t been briefed yet.”  This makes sure they won’t be giving any meaningful feedback on consumer problems. The CEO told me in 2016 he can’t have consumers troubling these council members. This is irresponsible.

3) One pre-submitted question was re developers selling pre-construction condos, then abruptly cancelling the project. Tarion’s K. Brodie, V.P. of Warranty Services, said they can ask the builder for reasons and then review them, but basically they have no power to do anything. So if a builder cancels a project to later re-market it at a higher price, Tarion is a toothless regulator, even if the reasons appear “improper”. What are the consumer’s rights? “Talk to your real estate lawyer“, says Tarion. Consumers who’ve done so have had lawyers literally laugh in their face at the futility of finding any consumer protection here.

4) If Tarion won’t honour your warranty claim, you can go to the License Appeal Tribunal, which is “independent”, says Tarion. What they don’t tell you is consumers lose 85% of these cases. Tarion is always represented by lawyers, and you’re up against 2 sets of counsel, Tarion’s and the builder’s. Most consumers have to self-represent due to the high cost of hiring specialized litigation lawyers. This is not fair or balanced dispute resolution.

5) Tarion’s V.P. Ms. Waraich, past-president of the Liberal Party, seemed pleased to state: “this is the builder’s warranty”. Not the whole truth. The builder pays the warranty fee initially, then passes it on to the consumer in the purchase contract, and it’s usually not itemized. The warranty is mandatory under Ontario law, you can’t opt out of it, you’re stuck with Tarion.

6) Re policy-making, the new chair said Tarion is un-biased toward builders, and develops policies to protect consumers. He gave the usual example of making builders pay for major structural defects, whereas this was previously paid for out of the warranty fund. Not so either. We understand from several sources that good builders were fed up paying for sloppy builders’ work, and wanted them to pay for their own defects, so this new policy was developed. But Tarion spins this as – look how consumer-friendly we are! These are the same board members who try to sell us “builders are all consumer members”, and builders are the best ones to speak for the consumer.” They seem to think we’re fools.

At the end of the 2-hour webcast, the CEO lamented “Tarion is a misunderstood organization”,  and “staff at Tarion truly cares“, “but we can’t be the lightning rod for everything which goes wrong“.

He won’t find a lot of sympathy for this. Tarion is a government-granted monopoly, has no competitors, operates free of any real oversight, pays sky-high “secret” executive compensation, and sits on over $400 million, most of it collected from warranty fees passed on to consumers.

They’ve built firewalls to suppress real consumer feedback, they block homeowners on social media, and hide behind a webcast annual meeting. They drop the “L“-word (lawyer) whenever they can to scare off pesky consumers, block consumer advocates from board or senior positions, and their annual meeting is, frankly, embarrassing to watch.

Why does our Ontario government keep trying to sell us the idea this is a “consumer protection” organization? Because builder lobby groups are deep-pocketed, politically well-connected, and new home building is a huge economic engine the government is reluctant to reign in.  And powerful industries don’t like being reigned in either. Consumers have to fend for themselves, and have no access to power-brokers or policy-making. The government is supposed to be on the consumer’s side, but it seems they’ve followed the money and power.

Hopefully a change in government, widely expected on June 8th, 2018, will finally take real action. A new government must show this “black box” for what it really is, another builder lobby group, this one financed by the consumer.

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