The Financial Consumer Agency of Canada has censured Scotiabank for negative option billing in a breach of regulations.
The agency says Scotiabank opened thousands of customer accounts despite never being asked, to according to Blacklock’s Reporter .
“Regulations require that a bank first obtain a person’s express consent before providing them with a product or service,” wrote Agency head and Commissioner Judith Robertson.
“The purpose of the requirement for express consent is to allow consumers to make informed financial decisions. Providing consumers with a product without their express consent denies them this opportunity and therefore introduces harm. Scotiabank was negligent.”
Scotiabank was cited for improper sales practices for a five-month period in 2018 and the agency suspected it may have gone on for years.
As a result of the investigation, Scotiabank refunded $80,000 in fees and interest charges to 5,600 account holders but no penalty was levied.
On May 6, Rogers Bank, an online division of Rogers Communications, was fined $250,000 for breach of the same Negative Option Billing Regulations.
And the Bank of Montreal in 2020 was fined $500,000 for improper sales of optional insurance to credit card customers.
In 2000, Parliament looked at a private Liberal bill to ban all negative option billing but it lapsed in the Senate banking committee.