Credit cards: Option consommateurs signs an agreement in principle with two banks - $37.5 million could be paid out

Why was a notice published in the newspapers?

The purpose of this notice is to inform class members of three class actions thatOption consommateurs, MBNA Canada Bank (now known as BofA Canada Bank) and Royal Bank of Canada have reached an agreement in principle.

What are the objects of these three class actions?

According to Option consommateurs, BofA Bank Canada and Royal Bank of Canada contravened the Consumer Protection Act, R.S.Q., chapter P-40.1, by unilaterally increasing members' credit limits between January 12, 2001 and January 1, 2010. BofA Bank Canada and Royal Bank of Canada dispute this allegation; they state that they complied at all times with the applicable legislation, i.e. federal legislation.

According to Option consommateurs, BofA Bank Canada and Royal Bank of Canada contravened the Consumer Protection Act, R.S.Q., chapter P-40.1, between August 2, 2000 and September 1, 2010, by denying members a 21-day grace period to pay off their balance. BofA Bank Canada and Royal Bank of Canada dispute this claim, and state that they complied at all times with the applicable federal legislation.

The over-limit and cash-advance charges imposed by BofA Bank Canada and Royal Bank of Canada on members since January 12, 2001 and October 4, 2001 respectively have not been included in the calculation of the credit rate. According to Option consommateurs, this omission contravenes the Consumer Protection Act, R.S.Q., chapter P-40.1. Banque BofA Canada and Royal Bank of Canada dispute this claim; they state that they have complied at all times with the applicable legislation, i.e. federal legislation.

Who are the members of the groups covered by this regulation?

A person is a member of one or other of the class action groups covered by the settlement if he or she meets all of the following conditions:

1. She is a natural person;
2. She has a credit card issued by Royal Bank of Canada or a card issued by MBNA Canada Bank prior to November 30, 2011;
3. It meets certain criteria defined in the Transaction Agreement;
4. She did not use this credit card for business purposes;
5. She has experienced one or more of the following situations:
   • Between January 12, 2001 and January 1, 2010, the credit limit on this credit card was increased without the person's prior express consent;
   • Between August 2, 2000 and September 1, 2010, she did not benefit from a 21-day grace period before credit charges were applied;
   • It has paid fees for exceeding the credit limit since January 12, 2001 in the case of Royal Bank of Canada and between January 12, 2001 and November 30, 2011 in the case of BofA Bank Canada;

It has paid fees for cash advances since October 4, 2001 in the case of Royal Bank of Canada, and between October 4, 2001 and November 30, 2011 in the case of BofA Bank Canada.

What are the regulations?

Without admission of liability, in order to avoid the additional costs and expenses of a potential trial, BofA Bank Canada and Royal Bank of Canada have agreed to pay a total of $37.5 million in full settlement of the class members' claims.

Will this settlement have to be approved by a court?

Yes. The Superior Court will hold a hearing to decide whether to approve the settlement on May 22, 2014 at 2:00 p.m. in room 16.12 of the Montreal courthouse, located at 1 Notre-Dame Street East in Montreal.

IsOption consommateurs satisfied with the settlement?

Yes. Option consommateurs and its lawyers believe that the settlement is the best solution for these groups. They will be asking the Superior Court to approve it.

How will the $37.5 million be distributed?

After deduction ofOption consommateurs's legal fees, the balance of the $37.5 million paid by BofA Bank Canada and Royal Bank of Canada will be allocated as follows:

• 26,371,093.76 to compensate group members directly;
• 350,000 to indirectly compensate group members; this amount will be shared between Option consommateurs, Pro Bono Québec and the Dans la marge jusqu'au cou! campaign of the Coalition des associations de consommateurs du Québec to help fund their consumer awareness activities on budgeting, credit, debt and access to justice.

Who is eligible to receive a share of the $26,371,093.76 compensation?

Class members who hold an active credit card issued by either bank during the settlement period, and who meet certain additional compensation criteria set out in the Settlement Agreement. It is currently impossible to determine the exact number of members who will receive a share of the indemnity, but Option consommateurs estimates that the number could be as high as 1 million.

What steps do I need to take to receive a share of the $26,371,093 compensation?

No action is required to obtain compensation. The indemnity will be divided equally and paid in the form of a credit paid directly into the account of class members holding an active credit card issued by either of the two banks during the class period, and whose account meets certain additional indemnity criteria set out in the Settlement Agreement. It is currently impossible to determine the exact value of the credit that will be paid out. Option consommateurs estimates, however, that the value of this credit will be at least a dozen dollars.

When will the $26,371,093.76 indemnity be paid?

The credit will be paid directly to the account of each eligible Class Member holding an active credit card issued by Royal Bank of Canada within 150 days of the date on which the judgment approving the settlement becomes final. In the case of the accounts of each eligible Class Member holding an active credit card issued by MBNA Canada Bank, the credit will be paid no later than March 28, 2015.

How much of the $350,000 compensation Option consommateurs will Pro Bono Québec and the Coalition des associations de consommateurs du Québec's Dans la marge jusqu'au cou! campaign receive?

200,000 for Option consommateurs, $100,000 for Pro Bono Québec and $50,000 for the Dans la marge jusqu'au cou! campaign of the Coalition des associations de consommateurs du Québec.

What criteria must members of these groups meet to be eligible for compensation?

Members of these groups must hold at least one RBC or MBNA Mastercard credit card account whose holder's postal code is linked to a Quebec address. In addition, the account must meet the following criteria, namely a :

• Which is open;
• For which the first and last name of the Member appears on the electronic version of the Account;
• To which are associated a valid mailing address and a postal code in Quebec;
• Which is an Eligible account;
• Whose language of communication is either English or French;
• To which is associated a number of credit cards that is greater than zero;
• All or part of whose balance has not been written off or compromised, or whose payment is not in arrears for 60 days or more;
• For which a supplementary declaration must be sent in accordance with the Cost of Borrowing Regulations SOR/2001-101, in respect of the period during which the credit is to be applied, without regard to credit;
• In respect of which one or more of the holders has not exercised a right of exclusion communicated to the Procureurs des Banques by the Procureurs d'Option consommateurs in accordance with the Transaction;
• For which transactional data exist in electronic form (excluding BofA transactions up to and including December 31, 2004);and
• Which, for the record, does not apply to a CUETS credit card.

Consult the transaction agreement by by clicking here.

Consult the notice of hearing for approval of the by-law by clicking here.

Consult the objection form by clicking here.