Prepaid payment card class action certified in Ontario

The Ontario Superior Court of Justice has certified a class action against Peoples Trust Company, a federal trust company incorporated under the Trust and Loan Companies Act, and Peoples Card Services LLP. The class alleges that the defendants breached the Consumer Protection Act (Ontario) (the “Act“) and the gift card regulation in O. Reg. 17/05 (the general regulation made under the Act) (the “Gift Card Regulation“).

The class action was proposed in May 2014 by representative plaintiff Joyce Bernstein on behalf of a class of consumers in Ontario who purchased or acquired a prepaid payment card sold and/or issued by the defendant between October 1, 2007 (the date the Gift Card Regulation came into force) and April 30, 2014 (the day before the federal Prepaid Payment Products Regulations came into force). Bernstein acquired a $35 Vanilla Prepaid Visa in September 2010, which stated that it was “valid thru to 04/14”. Bernstein did not use the card  and found out in September 2013 that her card balance had been reduced to $0.

The class claims, inter alia, that:

  • prepaid payment cards issued by the defendants that are subject to a variety of fees and have an expiration date constitute an unfair practice under the Act
  • the defendants contravened the Gift Card Regulation by failing to disclose fee information on the front of the card (the terms were placed inside the packaging of the card and thus the class argues that the defendants did not bring the information to the consumer’s attention until after purchase, in contravention of the Gift Card Regulation)

The claims have yet to be proven. Given recent developments in prepaid card/gift card litigation over the last couple of years, and the arguments respecting the application of provincial consumer protection laws to federal entities, this is one to watch.





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