Retail Council of Canada (RCC) and the Canadian Federation of Independent Business (CFIB) welcome this week'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.
During the preparation of the guidance document, RCC's submission called for FCAC Commission Ursula Menke to examine specific areas where the Code was being ignored or undermined. Diane J. Brisebois, RCC president and CEO, says that the Commissioner has responded to these concerns, and is demanding the payment card industry "promptly address these issues."
CFIB president and CEO Dan Kelly says that the CFIB commends the FCAC and other industry players for siding with small merchants by clarifying acceptable business practices in the Canadian payments industry. "The Code is doing what it was intended to do—protect consumers and merchants."
Areas of concern raised by RCC's merchant members, along with the Commissioner's response, were:
1. Merchants: Sales and Business Practices - Our merchants noted that discrepancies between agreements and statements were often misleading or dishonest, lacked clarity and were incomplete.
Commissioner: "Payment Card network Operators (PCNOs) will work directly with their participants to promptly address sales or business practices within their networks that are inconsistent with the requirement to provide clear and simple disclosure to merchants or that may be misleading to merchants."
2. Merchants: Disclosure in multiple provider agreements - Our merchants often thought they were signing a single contract provider agreement, but instead found themselves obligated to multiple service providers. Our merchants asked that key information affecting the merchant must be disclosed in a clear, easy to understand manner prior to signing any contact.
Commissioner: "PCNOs will work with their participants to improve the clarity of disclosure to be provided to merchants...by requiring that key information be presented in a manner that is easy for merchants to find and understand."
"Some in the payment card industry have buried agreements within agreements within agreements which misinform and mislead merchants," said Brisebois. "We are grateful that Commissioner Menke is taking a hard line on this."
3. Merchants: Multiple contract cancellation penalties, costs or fees - Merchants signed merchant/acquirer agreements with some companies, to later discover they had actually entered into additional contracts for related services. As permitted under the Code, merchants could cancel their contract without penalty, but then found out there wre additional costs or penalties to cancel related contracts.
Commissioner: "PCNOs will work with their participants to ensure that, consistent with Element 3 of the Code, merchants will be permitted to cancel the merchant-acquirer agreement and all related service contracts without penalty, following notification of any new or increased fees by any participation or related service providers."
The CFIB also brought up the issues of inappropriate sales and business practices; disclosure to merchants in multiple provider agreements; and multiple contract cancellation penalties, costs or fees.
Both the CFIB and RCC are hoping for more good news, including a long-awaited ruling from the Competition Tribunal on further measures to help small merchants.