Prepaid credit cards won't expire: government
OTTAWA - The federal government is moving ahead with its consumer friendly agenda, unveiling new rules for prepaid credit cards, more inspections at gas pumps and plans to create a national financial code to streamline regulations and enhance consumer rights.
The measures were announced at two separate events involving three cabinet ministers Tuesday morning and appear to be tied to the throne speech pledge to make consumer protection a key policy in the two years leading up to the 2015 election campaign.
"A consumer code will help Canadians make more informed financial decisions today and in Canadaā€™s rapidly changing, increasingly digital financial marketplace in the future,ā€¯ said Maxime Bernier, minister for small business, in launching a public consultation process.
People can comment on the government's proposed consumer code online (email@example.com) until the end of February.
More concretely, the government said it will introduce new regulations banning expiry dates on prepaid credit cards, as well as ensure card issuers aren't allowed to impose fees that eat away at a card's balance within the first year.
The changes come after consumers complained that terms for using the cards were unclear and cumbersome and that card issuers imposed unfair fees.
Minister of State for Finance Kevin Sorensen said the rules governing use of the cards, which will come into effect in May, will have to be spelled out clearly for consumers.
Unlike traditional credit cards, prepaid cards allow consumers to pre-load funds that can be used to make purchases or cash withdrawals.
But the fees for using the cards haven't been spelled out as well as they should be, said Sorensen.
A big complaint from consumers has been over card expiry dates. Once the cards expire, card holders would lose the funds that were loaded onto them.
Not anymore, says Sorensen.
"Funds cannot, in general, expire," he said.
"Nor can financial institutions impose dormancy fees or maintenance fees within the first year of the product's activation."
The prepaid card industry, while relatively new, has grown recently and was estimated in 2011 to be worth $850 million.
At a separate event, Industry Minister James Moore said the government will give inspectors more tools to enforce the accuracy of measurements used by retailers to charge customers, whether it's at gas pumps or grocery stores.
The proposed regulations will call for greater frequency of inspections and increased fines for offenders.
"Canadian families expect that when they fuel up, they get what they pay for," said Moore. "Our new regulations will give inspectors the right enforcement tools to ensure that retailers are held accountable for the accuracy of their scales, gas pumps and other measuring devices."
ā€” With files from Julian Beltrame