Bank-of-Montreal,Marcotte, banks, Canada, credit, cards, class, action
Roger writing the LAWmag
Oct 2014

Banks Lose Class Action

David dings Goliath’s as Canadian banks are ordered to repay credit card currency conversion fees

In he Supreme court o Canada ruling of  Mqrotte  BMO,  [1]

«A class action was launched by consumers to seek repayment of conversion charges imposed by several credit card issuers (the “Banks”) on credit card purchases made in foreign currencies primarily on the basis that the conversion charges violated Quebec’s Consumer Protection Act (“CPA”).  The Banks argued that (1) the representative plaintiffs did not have a direct cause of action against each of the Banks and therefore did not have standing to sue all of them, (2) the CPA did not apply to them due to the Constitution Act, 1867, and (3) no repayment of the conversion charges was owed.

"The lower court (Superior Court of Quebc) maintained the class action and found that the CPA applied to the Banks.  It determined that the conversion charges were “credit charges” for the purposes of contracts extending variable credit, and ordered all the Banks to reimburse the conversion charges.  It further required BMO, NBC, Citibank, TD and Amex (the “Group A Banks”) to pay punitive damages for failing to disclose the conversion charges.  The Quebec Court of Appeal determined that the conversion charges were “net capital” and allowed the appeal of the non‑Group A Banks.  It maintained the order against the Group A Banks, but overturned the amount awarded against Amex as well as the award of punitive damages against all Group A Banks, with the exception of TD.»

The banks appealed to the SCC and lost. With punitive damages, the land’s highest court agreed the banks were charging «credit charges» and by not disclosing same to consumers, by applying contract law in its broadest sense, ruled that conversion fees on currency conversion are credit fees and should have been disclosed as such to consumers.

The banks’ argument that the Consumer Protection Act does not apply to them as they are governed by the Federal statutes by virtue of the Constitution Act, 1867 failed to convince the learned judges. The class action potentially sees the banks named in the suit repaying the conversion fees to consumers.


Posted in Commercial Law