Cancelling a phone contract

The national Wireless Code is a mandatory code of conduct for cellphone service providers. It contains protections for every Canadian with a cellphone plan. 

Under the Code, when you sign a cellphone contract you have a 15-day trial period to see whether the service meets your needs. During this period, you can cancel the contract — for any reason — without having to pay any penalty or early cancellation fee. 

To cancel the contract during the trial period, you can’t have burned through more than half of your monthly usage limits. You must return the device in near-new condition, in the original packaging.

For persons with disabilities, the trial period is 30 days, and the usage limits are doubled.

After the trial period, you can cancel your phone contract at any time. But you’ll have to pay an early cancellation fee. Your cancellation takes effect on the day the service provider receives notice of the cancellation.

If you didn’t receive a discounted or free phone on signing the contract, the early cancellation fee can be no more than $50. 

The Wireless Code sets out a formula for calculating the early cancellation fee. The fee is the lesser of:

• $50, or

• 10% of your minimum monthly charge for the remaining months of the contract, up to a maximum of 24 months.

Your service provider can’t charge you any fee or penalty other than the early cancellation fee.

See below under work out the problem for an example of how to calculate the early cancellation fee. 

If you got a free or discounted phone as part of signing your cellphone contract, you have to pay for the phone if you cancel early.

In throwing in a free or discounted phone, your provider gave you what’s called a device subsidy. Effectively, you agreed to pay the phone off in installments built into the contract. If you cancel early, you’ll have to pay off any remaining device subsidy.

The Wireless Code sets out how the early cancellation fee is calculated when there’s a subsidized device. The device subsidy is the retail price of the phone minus the amount you paid for the phone on signing the contract. The early cancellation fee must be reduced by an equal amount each month, until the charge falls to $0 by the end of the contract. 

See below under work out the problem for how to calculate the early cancellation fee when there’s a device subsidy still owing.

“My cellphone contract included unlimited data. After the first year, my provider notified me that they were putting me on a 10GB data plan. They told me data was an ‘add-on’ feature of my contract, which allowed them to change the data service by giving me 30 days’ notice. I complained. I argued data was a ‘key term’ of my contract and they had no right to change it without my consent. The wireless complaints agency agreed with me.” 

– Carmen, Vancouver, BC

Under the Wireless Code, a service provider can change a key term or condition of your cellphone contract in one of two ways: 

• If the change clearly benefits you. The benefit can be reducing your rate for a service or increasing your usage allowance for a service. 

• If you’re informed of the change and agree to it. 

Otherwise, if you don’t agree to it, you may refuse the change. If the provider insists on making the change, then you can ask to cancel your contract without penalty.  

Key contract terms and conditions are:

• the voice, text, and data services included in the contract 

• any limits on the use of those services that could trigger overage charges or additional fees 

• the minimum monthly charge for services included in the contract

• the commitment period, including the end date of the contract

• any early cancellation fee, how much it decreases each month, and when a cancellation fee no longer applies

• if you received a free or discounted phone on signing the contract, the retail price of the phone and the amount you paid for the phone

A change to a related document may have the effect of changing the key contract terms and conditions. If it does, the provider needs your informed and express consent to the change. For example, a provider might make changes to its fair use policy that effectively place limits on your services that trigger additional fees. If so, the provider would need your consent to the change in the fair use policy.

If the provider wishes to change other contract terms and conditions or the related documents, it must give you at least 30 days’ notice. The notice must explain the change and when it will take effect.

If you choose to upgrade or change your phone, your phone provider must clearly tell you in the written contract if this will extend your contract or change it in any way. 

If the provider offers you a phone upgrade, they must clearly explain any changes to the existing contract terms. The explanation must include whether accepting the upgrade will extend your commitment period.

Under the Wireless Code, when a fixed-term phone contract runs out, the provider may automatically extend it on a month-to-month basis. 

However, if a provider wants to extend the contract:

• The original contract must say whether the contract will be extended automatically on a month-to-month basis when it expires. The contract must say on what date the extension will start. 

• The provider must give at least 90 days’ notice of the extension before the contract runs out. The provider’s extension notice must inform you that as of the date the contract is set to expire, you can switch plans, change service providers, or cancel your service without penalty. As well, the notice must explain whether the contract will be extended with the same rates and terms, or whether the provider proposes a new minimum monthly charge for service going forward.  

Under BC law, if a business enters into a contract with someone under age 19, the minor generally isn't responsible for keeping up their end of the bargain. The contract is unenforceable against the minor. The exceptions are: 

• if the minor affirms or partially performs the contract on reaching age 19, or

• the contract provides the minor with the “necessaries” of life — services that are vital to their health or welfare.

If you’re under 19 and you want out of a phone contract, you can cancel it without penalty (unless having a phone was “vital to your health or welfare”). Make sure you return the phone to the retailer. Also, be sure to send a letter to the provider stating your understanding that they'll close the account. Keep a copy for your files.

If you decide to cancel your phone contract, calculate your cancellation costs. Those costs will depend on when you signed your contract and whether you received a free or discounted phone.

If you cancel during the trial period

If you cancel within 15 days of signing a phone contract (during the trial period), you won’t pay any penalty or early cancellation fee.

If you didn’t get a free or discounted phone

If you cancel after the trial period and you did not receive a free or discounted phone on signing the contract, the early cancellation fee can be no more than $50. The cancellation fee is the lesser of: 

• $50, or

• 10% of your minimum monthly charge for the remaining months of the contract, up to a maximum of 24 months.

See below for an example of the cancellation fee calculation.

If you got a free or discounted phone

If you cancel after the trial period and you did receive a free or discounted phone on signing the contract, the early cancellation fee is to pay off any remaining device subsidy. 

The device subsidy represents the discount you were given off of the retail price of your phone for signing a contract. The retail price is the lesser of the manufacturer’s suggested retail price and the price the service provider charges for the device without a contract.

In calculating the early cancellation fee, the device subsidy must be reduced by an equal amount each month, so that it falls to $0 by the end of your contract.

If you did not receive a discounted or free phone on signing the contract, the early cancellation fee is the lesser of $50 or 10% of your minimum monthly charge for the remaining months of the contract, up to a maximum of 24 months.

For example, let’s say your minimum monthly charge is $70, and you have four months left on your contract.

The early cancellation fee calculation is:

10% of $70 = $7

$7 x 4 months remaining = $28

Because $28 is less than $50, $28 is the early cancellation fee.

If you did receive a free or discounted phone on signing the contract, the early cancellation fee goes toward paying off any remaining device subsidy. 

For example, let’s say the retail price of the phone was $695, you paid $95 for the phone on signing the contract, and you’re now in month 16 of a two-year contract. 

The early cancellation fee calculation is:

$695 - $95 = $600 device subsidy

$600 divided by 24 months = $25 per month

$25 x 16 months = $400 that you have paid towards the device subsidy

$600 - $400 = $200 is remaining on the device subsidy, and therefore is the early cancellation fee

You should be able to view your remaining device subsidy by logging into your account on your phone provider’s website.

To cancel your contract, typically you phone, email, or send regular mail to notify your service provider of the cancellation. Check your contract to see if there’s a specific way they want you to cancel.

If you phone, you may be transferred to another department that will make you an offer to entice you to stay. For example, they may offer a special monthly plan price or to reduce an early upgrade fee. As long as you’re firm and repeat your desire to cancel, they’ll eventually process your request. 

Your cancellation takes effect on the day the service provider receives notice of the cancellation (unless you specify a later cancellation date). In other words, you don’t need to provide 30 days’ notice. 

Yes. You can transfer your number to a new service provider at any time. (You may need to pay an early cancellation fee.) Do not cancel your current service; only active telephone numbers are eligible to be transferred to a new service provider. Contact the service provider you want to switch to first. The new service provider will contact your old service provider to transfer your phone number. We walk you through the process here.

No. If you use a prepaid service such as a prepaid phone card or pay-as-you-go service, the service provider doesn’t have to notify you of changes to the phone plan. 

Be aware that some prepaid plans are functionally very similar to postpaid plans. For example, in some “pay-in-advance” plans, a customer can deplete their prepaid balance and continue to use the service. The provider then includes overage charges on the customer’s next bill. Plans like this are treated as postpaid service contracts under the Wireless Code. In that case, the provider does need to notify you of changes to the phone plan.