If you concluded a fixed-length home phone service contract in which you received a discount on a product essential to the use of the service, such as a phone or a VoIP modem, the service provider is subject to rules that limit the cancellation fees that can be charged.
Factors that affect the cancellation fees
The greater the discount on the sales price of a product, the higher the cancellation fees can be. The closer you are to the end of the contract at the time of termination, the lesser the cancellation fees can be. The cancellation fees can never be greater than the amount of the discount you received.
Discounts you received on the price of a service have no impact on the calculation of the cancellation fees.
Calculating the cancellation fees
Here is the formula to allow you to calculate the maximum cancellation fees you can be charged if you received a discount on the sale price of a phone or a VoIP modem.
[Discount on the sale price of the device] - [Discount on the sale price of the device x Number of complete months elapsed ÷ Length of the contract] = Maximum cancellation fees
The month during which you terminate the contract is considered a completed month.
Sample calculation when a discount has been given
If you signed a contract for 12 months and received a phone worth $200 for free, the value of the discount given is $200. If you decide to cancel the contract in the 7th month, the maximum cancellation fee the service provider can charge will be calculated as follows:
$200 - ($200 x 7 ÷ 12), simplified as $200 - $116.66 = $83.33.
The service provider can charge a maximum fee of $83.33.
Last update : October 22, 2020
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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.