Option consommateurs is calling on the federal government to modify the banks' legal framework to make them more accountable for fraud. In our opinion, it is urgent that the federal government take action on this issue to offer consumers real protection against bank fraud.
Fraud is currently taking its toll on Canadian consumers, particularly the most vulnerable in society. According toOption consommateurs' Confidence Barometer, 30% of Canadians have been victims of bank fraud1. 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.
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 take 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 has "voluntarily" given the fraudster his bank details, this is a transaction that he has "authorized" and for which he is not entitled to reimbursement. This argument is, of course, highly questionable, considering that the supposed "authorization" given by the consumer to the transaction is the result of a deception that has vitiated his consent.
Unfortunately, the consumer protection framework provides a clumsy 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 authenticator2. 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 card3. However, these protection mechanisms suffer from a number of shortcomings.
Read our brief to find out more about our proposals:
