CFIB hails fixes to unfair credit card practices

The Canadian Federation of Independent Business (CFIB) welcomes today’s decision by the Financial Consumer Agency of Canada (FCAC) to clarify and strengthen rules that prevent some unfair practices in the credit card industry. The FCAC has clarified rules around the application of the Code of Conduct for the Credit and Debit Card Industry in Canada […]

By Staff | February 13, 2013 | Last updated on February 13, 2013

2 min read

The FCAC has clarified rules around the application of the Code of Conduct for the Credit and Debit Card Industry in Canada that address concerns raised by CFIB. These changes include the practice by some rogue players in the credit card industry to circumvent the code by splitting contracts to trap small merchants into exorbitant fees.

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“We commend the FCAC and other industry players for siding with small merchants by clarifying acceptable business practices in the Canadian payments industry,” says CFIB president and CEO Dan Kelly. “The Code is doing what it was intended to do – protect consumers and merchants.”

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FCAC provided the credit card industry with guidance on the following issues raised by CFIB:

Inappropriate business practices: No altering of signed contracts without merchant consent; no quoting of rates that will not be honoured; give merchants copies of contracts.

Disclosure: Contracts for debit/credit card processing services, especially for those businesses with multiple provider agreements, must be clear and easy to understand, and include certain information specified by FCAC.

Multiple costs or fees: The Code presently allows merchants to cancel their credit/debit contracts without penalty if their fees go up. However, some independent sales organizations were trapping merchants by applying large exit penalties to separate contracts for leased equipment. It has been clarified that the right to cancel a credit/debit processing contract without penalty also applies to any related contracts.