On July 1, 2018, amendments to the general regulation under Ontario’s Consumer Protection Act, 2002 (the “Ontario CPA”) will come into force. The amendments carve out cards issued by federally regulated financial institutions (“FRFIs”) from the application of the Ontario CPA, address gifted and reloadable gift cards, and make some other incidental amendments.
In the past few years, there was some uncertainty over whether provincial consumer protection legislation would govern cards issued by FRFIs. In 2014, the Supreme Court of Canada held in Bank of Montreal v. Marcotte that Quebec’s provincial consumer protection legislation did, indeed, apply to pre-paid credit cards and similar products offered by FRFIs. The case arose from a claim for repayment of conversion charges arising from pre-paid credit card transactions involving foreign currencies. While these charges were in violation of Quebec’s consumer protection legislation, the FRFI defendants argued that they, and their products, were governed exclusively at the federal level under the Prepaid Payment Products Regulations of the Bank Act (Canada). As a consequence of constitutional division of powers, they argued, FRFIs were not also bound by provincial consumer protection legislation. However, in its decision, the Court reasoned that “credit card contracts are not at the core of banking activities and the [Quebec] CPA does not interfere with the federal banking regime.” As a result, the Court permitted the provincial violations to form the basis of a consumer class action in Quebec against several FRFIs.
Ontario CPA Amendments
1. Carving out FRFI cards
Under these amendments, Ontario will join British Columbia and Alberta in excluding pre-paid credit cards from the application of provincial consumer protection legislation. The Ontario CPA’s amended definition of a gift card will expressly exclude a gift card “issued by a financial institution,” so such products issued by banks, credit unions, or trust and loan corporations governed under the Bank Act, the Credit Unions and Caisses Populaires Act, 1994 (Ontario), or the Loan and Trust Corporations Act (Ontario) will not be captured.
2. ‘Gifted’ Gift Cards
The amendments clarify that the Ontario CPA applies, not only where the gift card is purchased and used by the same consumer, but also where the gift card is used by a third party. So it is not just the consumer who purchases the gift card who is entitled to the rights of the legislation, but also the “holder of the card,” whether purchased for themselves or received from another person.
3. Reloadable Gift Cards
The amendments also specifically address reloadable cards, clarifying that the same rules apply to reloadable as to non-reloadable cards. Therefore, a gift card agreement is entered into when “payment is made in full” for the card or, in the case of a reloadable card, when the initial value of the card is paid for.