Bank should repay undisclosed conversion charges

Supreme Court of Canada:While maintaining a class action taken against a bank which failed to disclose the conversion charges in its cardholder agreement, applicable on transactions/purchases made by the credit card and charge card holders in foreign currencies, the Court has condemned the Bank to reimburse the conversion charges collected from all cardholders. The Court said that Quebec’s Consumer Protection Act (“CPA”) imposes various rules on the content and disclosure of charges and fees in contracts extending variable credit. The evidence was clear that from 1993 to 2003 there was no reference in the Bank’s cardholder agreement to the conversion charge because an “exchange rate determined by the Bank” could not be understood as including such a charge. There was no obligation for cardholders to pay the conversion charges as those payments by cardholders were made in error

In this case the petitioner bank made an offer on its credit and charge cards through which the card holders/consumers could make purchases in foreign currencies. An obligation was imposed on the consumers to pay a conversion charge on such purchases. This conversion charge was not disclosed in the cardholder agreements between 1993 and 2003. The respondent, filed a class action against the bank for repayment of the conversion charges so imposed and claimed that the conversion charges violated the provisions of both CPA and Civil Code of Quebec (“CCQ”) since, class at issue in this action included both consumer and non-consumer cardholders of credit and charge cards. In appeal, the Bank argued that CPA was not applicable on it and it does not owe any repayment of conversion charges.

Dismissing the appeal, Court held that the trial Judge’s finding that conversion charge was a separate fee rather than a component of the exchange rate, was a determination of fact or mixed fact and law, and should not be disturbed. The Bank violated Section 12 of CPA and should reimburse the conversion charges collected from the consumer class members between 1993 and 2003 under Section 272(c) of CPA. Since, CPA does not apply to non-consumer class members, Bank must instead restore the conversion charges u/CCQ. Amex Bank of Canada v. Adams, 2014 SCC 56, decided on 19-09-2014

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