Consultation on proposals to strengthen Canada's financial sector

Fraud is currently taking its toll on Canadian consumers, particularly the most vulnerable members of society. According to Option consommateurs' Confidence Barometer, 30% of Canadians have been victims of bank fraud. According to the Canadian Anti-Fraud Centre, a record 42,000 Canadians lost $569 million to fraud in 2023. These statistics vastly underestimate the phenomenon, since only 5% to 10% of Canadians report being victims of fraud.

More fraud calls

Through our legal information service, we are receiving more and more calls from consumers who have been the target of bank fraud. Many of these consumers are victims of scams where criminals use sophisticated methods to get their money or banking information. Examples include the “fake representative” fraud, where the criminal is able to obtain the consumer's bank details by posing as an employee of a financial institution, and the “grandparent” fraud, where the fraudster poses as a relative in distress.

Victims of these frauds often report that their financial institution has refused to reimburse them for the sums embezzled by the fraudster, which can amount to thousands of dollars. It's not uncommon for the bank to claim that, since the victim “voluntarily” gave the fraudster his or her banking details, the transaction was “authorized” by the victim, and he or she is not entitled to reimbursement. This argument is, of course, highly questionable, given that the supposed “authorization” given by the consumer to the transaction is the result of a deception that has vitiated his consent.

Protection is not enough

Unfortunately, the consumer protection framework is a poor response to this problem. As the ministry explains, the Bank Act states that consumers are only liable up to $50 for unauthorized use of their credit card, unless they are grossly negligent in safeguarding the card, information or authenticator.

The Canadian Code of Practice for Consumer Debit Card Services also includes provisions that place liability for loss on the financial institution in the event of unauthorized use of the debit card. However, these protection mechanisms suffer from several shortcomings.