It is heartbreaking to watch a vulnerable homeowner sit across the table from you, with tears in their eyes, and tell you that they paid $20,000.00 for a water softener which doesn’t work.
So who are these door-to-door salesmen—and it is always men, by the way—who are getting homeowners to sign expensive contracts for plumbing, electrical, or HVAC equipment of dubious quality, and how do they do it?
I call it the Ontario HVAC Scam, and it exploits loopholes in the laws regarding consumer protection, civil litigation, and the real property registration system. And it costs unsuspecting Ontario homeowners millions of dollars.
This questionable business model targets vulnerable homeowners, such as the elderly or newcomers to Canada, with deceptive and high-pressure sales tactics. It has grown into an industry of significant size, and appears to be largely immune to half-hearted attempts to regulate it.
The scam works this way: rental companies use high-pressure sales tactics to dupe homeowners into renting HVAC, plumbing, or electrical equipment at massively inflated prices. They then assign the rental contract to an associated financing company who registers a notice of security interest or other instrument—effectively, a Lien—against the house, without telling the homeowner. When the homeowner goes to sell or refinance their house, they are shocked when their lawyer tells them about the Lien. They are even more shocked when the finance company sends the payout statement, demanding payment of $10,000.00, $15,000.00, or even more. All to "buy out" a rental contract for an air conditioner or water softener, the retail value of which is likely no more than $2,500.00. In many cases, this is after the homeowner has already paid thousands of dollars in rental fees before "buying out" the contract, which makes the disparity between fair retail value and the amounts charged even more obscene.
The finance company does not pluck these payout numbers out of the air. They choose the highest number that is still low enough that it would typically cost more to take them to court. Faced with the prospect of significant legal fees, homeowners usually stomach the bill and pay out the Lien. They end up handing over thousands of dollars more than the equipment is worth to pay out contracts which were obtained through illegal marketing practices, all for home equipment which they likely didn't need in the first place.