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Do you receive a refund? CIBC removes new fees on gift cards after Go Public gets involved | Radio-Canada News


Catharine Murphy loves sending e-gift cards to friends and family – for special occasions, to mark a holiday, to simply say thank you, or to make up for a missed important event.

“I’m the person who will always wish you a belated birthday,” she said with a laugh during an interview at her home in Oakville, Ontario.

But last November, while reviewing her CIBC Visa credit card statement, Murphy noticed an additional $5 charge underneath a $10 Tim Hortons gift card she had purchased for a son who was at school.

She also saw an additional $5 charge for a second $10 Tim Hortons gift card that Murphy had purchased for her daughter.

Curious, she pulled out her October Visa statement and discovered that the bank had also taken $5 from her when she purchased a $25 Starbucks e-gift card for a friend that month. A gift card she purchased in August had no additional fees.

Murphy called CIBC to inquire about the additional fee and, after a lengthy conversation with a customer service representative, learned that it was a “cash advance” fee, charged each time someone was purchasing a gift card sold by a company called CashStar.

This third-party company sells gift cards online or through an app for more than 300 businesses, many of which are popular brands such as Tim Hortons, Starbucks, Best Buy, Home Depot, Lululemon and Sephora.

Murphy said it was “infuriating” to see a $5 cash advance fee on the purchase of a gift card – a fee that accrued interest from the day of purchase at the rate of 22.99 percent – ​​not the usual 19.99 percent charged on regular gift cards. purchases only if the monthly credit card balance is not paid off.

On top of that, she says the CIBC representative couldn’t explain who was responsible for the fees: the bank itself or CashStar.

Although her call was forwarded to a senior manager and returned a few days later, Murphy says she was unable to get a clear picture of who was responsible for the accusations.

Close-up of a credit card statement with two highlighted lines, one showing a $25 purchase and another showing a $5 cash advance fee.
A $5 cash advance fee on purchased e-gift cards started showing up on Catharine Murphy’s credit card statements last fall. (Evan Mitsui/CBC)

Transparency important to customers

This lack of clarity is what consumers find most frustrating, especially when big banks are making record profits, says a professor at the Sauder School of Business at the University of British Columbia.

“They should be upfront about what consumers are paying,” said Murali Chandrashekaran, who specializes in marketing and behavioral sciences. “It’s the transparency that is more important than the pricing itself.”

When Go Public asked CashStar about cash advance fees, a spokesperson said in a written statement that the company does not charge any additional fees and that all cash advance fees will be “billed by the issuer of the credit card”.

CIBC declined an interview request, but in a report a spokesperson said: “Some gift cards purchased from third-party sellers are treated as cash-like transactions, which may result in cash advance fees.”

When Go Public asked the spokesperson for clarification, he said the fees were triggered by transaction codes on some e-gift cards – but would not say why the fees were suddenly charged last fall .

The bank said CIBC has now decided to waive the fees and will automatically refund cash advance fees for customers who used credit cards to purchase e-gift cards between September 29, 2023 and on February 29, 2024.

The spokesperson declined to explain the reason for the bank’s change of heart.

A red CIBC logo is visible at the base of a tall skyscraper on a cloudy day.
After Go Public contacted CIBC, the bank removed the cash advance fee it added to the purchase of many gift cards last fall and said customers would be refunded. (Sam Nar/CBC)

Angry customers question CIBC

Murphy has plenty of company on social media forums such as Reddit, where people with CIBC Visa cards, CIBC Mastercards and CIBC-owned Simplii credit cards have all noticed the fees. $5 on their statements after purchasing e-gift cards.

Many reported that after waiting on the phone for up to an hour, a CIBC customer service representative agreed to refund the $5 fee as a one-time goodwill gesture.

That’s also what a CIBC representative told Murphy when she called her bank about the three $5 fees. The first agent she spoke to said she was only allowed to refund one of the additional charges.

“If I had been pressed for time that day, I would have had to settle for that,” Murphy said. Instead, she escalated the appeal and got all three refunded.

Chandrashekaran, a business professor, says that while a refund feels nice, his research shows that what people want most is to be treated fairly, to hear a genuine apology from a company and the promise that it will will not happen again.

A South Asian man stands in front of a building with colorful glass windows, wearing glasses and a bright red sweater.
Murali Chandrashekaran, a business professor at the University of British Columbia, says the quiet addition of bank fees undermines customer confidence. (Dillon Hodgin/CBC)

“The problem is that more often than not, companies say, ‘OK, we’ll write off that $5, but we’ll only do it once’ – as if they’re doing us a favor, and that puts us down,” he said. -he declares.

“This lack of respect undermines the very foundations of trust.”

Even though people like Murphy and others complained about these fees to CIBC as early as last September, the bank continued to charge “cash advance” fees.

Possible violations of the Competition Act

Go Public Reviewed CIBC Cardholder Agreement, which specifies, among other things, the fees that will be charged to customers for various services when using their credit card. There was no mention of gift cards.

CIBC states that a “cash advance” applies when using a credit card to withdraw money from a financial institution or ATM, when paying a bill with a credit card or when transferring funds.

It states that a “cash-like transaction” applies when using a credit card for a “cash-like” transaction or when purchasing a “cash convertible” item, such as lottery tickets.

When asked why gift cards aren’t mentioned in the agreement, CIBC said it included “illustrative” examples of what could trigger cash advance fees.

Since customers are not able to convert the e-gift cards in question to cash, the purchase should not be subject to a “cash advance” fee, Chandrashekaran said. Additionally, he says, adding unexpected fees to a purchase can violate the Competition Act.

WATCH | Want to be sure you’ll get a refund?

Tips for CIBC credit card users

Murali Chandrashekaran, a business professor at the University of British Columbia, offers advice to CIBC customers who want to ensure they get the promised refund for the $5 “cash advance” fee on e-gift card purchases.

Two years ago, the federal government strengthened consumer protection in the Competition Actto try to ensure that the price Canadians see for a product is the price they pay.

“When a price is unattainable, because consumers must pay additional fees or charges to purchase a product or service, it affects their ability to make informed decisions,” reads the Bureau of Price website. competition.

CIBC doesn’t sell the gift cards, Chandrashekaran said, but there is “no transparency” about why they turn out to cost more than the customer expected to pay.

“It’s up to consumers to decide whether or not they want to accept that $5,” he said. “Consumers were never given the opportunity to opt out of this situation.”

CIBC did not respond to Go Public’s request for comment on whether the fees constitute a possible violation of the Competition Act.

Bank fees cost Canadians billions, expert says

The fees charged by CIBC are just the latest in a long list of banking fees that Canadians don’t like, Chandrashekaran said.

And now a report published in February According to business consulting firm North Economics, Canadians pay “significantly higher” fees than many people in other countries.

The report estimates that Canadians could save $8.5 billion a year in banking fees, or about $250 per adult, if banking regulators had a competition mandate, as is the case in countries like the United Kingdom. United and Australia.

WATCH | Murphy spent hours trying to get to the bottom of the extra charges:

CIBC stops charging cash advance fees for e-gift cards | Go in public

CIBC charged its credit card customers a $5 cash advance fee for e-gift card purchases until Go Public got involved.

“In Canada… no regulator really pays attention to how competitive banks are with each other,” said economist Alain de Bossard, managing director of North Economics, adding that banks often seem to behave more coordinated rather than competitive.

“I certainly think there are things the government can do to improve the situation for Canadians,” de Bossard said.

Murphy says the experience changed the way she shops.

The last time she gave a friend a gift card, instead of buying one online, she went to a store to buy it and personally dropped it off.

“I haven’t sent an e-gift card to anyone since I got this thing,” Murphy said. “It was a blatant example of the bank taking advantage of people.”

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