Nova Scotia

Customers who unknowingly paid for credit card insurance frustrated banks won't show proof they signed up

While some Canadians have been successful in getting refunds from their banks for insurance they unknowingly were paying for on their credit cards, others have been offered a partial refund, despite a lack of proof they ever agreed to the coverage.

Saskatchewan man refunded more than $9,000 after repeatedly contacting bank about monthly charge

Credit card insurance is a product that banks market as a way to help with credit card payments if a customer loses their job or gets sick. Some Canadians say they are being charged for it when they didn't sign up it. But the banks are refusing to provide proof they signed up for credit card insurance. (CBC)

Kris Holmberg is frustrated RBC wouldn't initially refund him thousands of dollars spent on credit card insurance he says he didn't sign up for, even though the bank won't provide proof that he did.

And he's not the only Canadian facing this predicament.

"All I want is proof," said Holmberg, who lives in the small town of Pense, Sask.

"If they have proof that I said something verbally on the phone or something that I have signed that clearly outlines I'm accepting it, fine. I made a mistake."

Credit card insurance is a product that banks market as a way to help with credit card payments if customers lose their jobs or get sick.

After CBC News contacted RBC about Holmberg's case, he was told he would be refunded $9,090 — all of the credit card insurance fees he's paid in the past 10 years.

"I was just blown away," he said.

Holmberg was unknowingly making payments all that time. He said he's always carried more than enough personal life insurance to provide for his wife and four children if something were to happen to him. He also has life insurance through work. 

Holmberg first contacted RBC in early February about the charge for "BalanceProtector" insurance on his Visa. Since then, he's sent 11 emails to his bank regarding the matter.

In a Feb. 13, 2020, email to Holmberg, an RBC employee wrote: "I'm not too sure if there ever was documentation for you accepting, someone might have put it on, there is no way to tell as the application is no longer on the system. Sorry."

Kris Holmberg, third from left, is getting a refund of $9,090 after RBC was unable to provide proof he agreed to purchase credit card insurance. (Submitted by Vanessa Amy)

Holmberg was told an investigation had been started. On May 20, an RBC staffer said the investigation was closed, but was unable to tell him the outcome.

Holmberg then called the insurance company RBC used for the product. He said he was told there was no file and no investigation, but that the company would start one that day.

"You try as much as you can to trust your financial institution," he said. "I've been with them since I was 12 years old. I have an A+ credit rating. I don't miss any bills. And to get treated like this?"

CBC News contacted RBC about Holmberg's situation on May 22. The bank's response did not say whether Holmberg had ever signed up for credit card insurance, but decided to provide a full refund for the premiums.

'I was just blown away,' says customer

"After fully investigating Mr. Holmberg's file, we have decided to offer the refund of premiums that he was seeking," Greg Skinner, RBC's insurance director of communications, wrote in an email to CBC News on May 25. "Our goal is to ensure clients are happy with the products they purchase and we have reached out directly to our client to resolve the complaint."

Holmberg said he was told the data file with his consent was corrupted. Because the bank couldn't prove he agreed to the insurance, it decided to refund all of his payments.

Paperwork for refund in the works

 Jackie Johnson of Brooks, Alta., is also getting a refund, but it wasn't easy. After seeing a CBC story about customers who were unknowingly paying for credit card insurance, she discovered she was paying for it on a Scotiabank credit card bill, which showed up on her bill as Scotia "SC CP Premium."

She contacted Scotiabank to ask for proof she'd agreed to it. Instead, she received a letter saying she had been enrolled in the coverage since 2013.

"An enrollment period of seven years is sufficient time for you to have contacted your branch with any concerns you might have had concerning your account. Based on these findings, a premium refund will not be processed," the letter said.

Jackie Johnson didn't realize that the SCOTIA SC CP Premium charge on her credit card bill was insurance. She thought it was a mandatory charge because she was carrying a balance. Scotiabank did not provide proof she signed up, but refused to provide a refund. It is now reviewing her case. (Submitted by Jackie Johnson)

The letter did not address Johnson's request for proof. It said she could escalate her complaint to the president's office, which she did. Johnson estimated she's paid up to $8,000 in credit card insurance so far.

But then the bank had a change of heart and decided to return all of Johnson's fees incurred since 2013, which amounted to $8,261. As of Friday May 29, the paperwork to receive that money was still being worked on.  

Some customers offered partial refund

Calgary resident Stephen Tear discovered last year he has been paying for credit card insurance on his Desjardins Visa for the past 13 years. He has no recollection of agreeing to it. He said if he'd been aware, he would have tried to file a claim because he's been laid off several times over those years.

He began pursuing a refund at the start of 2020. When Tear asked for proof he'd agreed to the coverage, he said he was told he'd signed up online, so there was no proof.

The bank offered him a refund for the past six months of premiums, but he declined.

WATCH | Check your credit card bill. You may be entitled to a refund:

A Marketplace story about banks signing up customers for credit card insurance without their knowledge led a Nova Scotia woman to examine her own bank statement. She has since been refunded $3,900 after she questioned the charge. 3:42

After CBC contacted Desjardins, Tear received a call saying he would be refunded all payments made in the past 13 years, which amounted to $1,600.

Desjardins spokesperson Chantal Corbeil told CBC News in an email that the bank does not comment on specific cases.

"To include insurance on a credit card, Desjardins must first obtain the client's consent [verbally]. Therefore, insurance cannot be included without the client's consent," she said. "Our processes are rigourous. We make sure that the client understands the terms and conditions of our products."

Bank watchdog takes issue 'very seriously'

Canada's bank regulator, the Federal Consumer Agency of Canada, said in an email to CBC News that it "takes the issue of banks selling optional credit insurance products without the express consent of consumers very seriously."

"Express consent means that you must clearly agree to a financial product or service in writing or verbally before a bank or other federally regulated financial institution can sell or provide it to you," spokesperson Lynn Santerre said.

She noted that in 2017, the agency issued a bulletin to financial institutions to reinforce its expectation that they obtain "express consent" from customers for new products or services, in accordance with regulatory requirements.

Santerre said FCAC identified concerns with the way banks were selling optional credit insurance in its March 2018 industry review report. The agency has been supervising banks as they make changes based on those concerns.

"The FCAC has used all the appropriate tools available to supervise the compliance of banks with their consumer protection obligations as it relates to express consent," she said.

Stronger legislation needed, says advocate

The Public Interest Advocacy Centre, a non-profit consumer advocacy organization, has been questioning bank practices around insurance products for several years.

"If enough consumers complain, then it will become a problem for the banks," executive director John Lawford said.

John Lawford with the Public Interest Advocacy Centre says many people are unaware they can escalate complaints to a bank's ombudsman, and then have a further option of going to what is considered an independent ombudsman. (Christopher Gargus/CBC)

He said many people are unaware there's an escalation process to the bank's internal ombudsman and then a further option of going to what is considered an independent ombudsman.

If the independent ombudsman's caseload jumps 1,000 to 2,000 cases a year, it will lead to action, Lawford said

"They will notice it because they don't take that many cases and that will put it squarely on the agenda of the finance minister, who will finally believe this is a problem," he said.

Lawford said the federal Bank Act needs to be strengthened because "just saying you have consent is not enough."

What Canada's big banks are saying

CBC asked each of the big five Canadian banks to provide their policies on what they do when customers request proof of having signed up for credit card insurance, and how they decide who gets a refund.

Scotiabank said it takes customer concerns seriously and reviews any instance where customers feel the bank has not met their expectations.

CIBC said it is "focused on doing what's right for our clients each and every day. If a client raises a concern with us, we promptly investigate and take action as appropriate, and work with our clients to ensure they have the right products to meet their needs."

RBC said it fully investigates client concerns, and the insurer — in this case, Assurant — pays claims based on the terms and conditions of the insurance policy.

TD and BMO did not respond.

About the Author

Yvonne Colbert

Consumer Watchdog

Yvonne Colbert has been a journalist for nearly 35 years, covering everything from human interest stories to the provincial legislature. These days she helps consumers navigate an increasingly complex marketplace and avoid getting ripped off. She invites story ideas at yvonne.colbert@cbc.ca

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