Prepaid Cards

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A “prepaid card” is a card, cheque, certificate or other similar card that lets a person acquire products or services in exchange for a payment made in advance:

  • mobile telephone cards
  • bus passes
  • prepaid credit cards (Yes, it exists!)
  • gift certificates valid in a specific business (ex. a bookstore)
  • cards that can be exchanged for a particular item or service (ex. a massage)
  • cards valid at all businesses in a given place (ex. a shopping centre)

Important! Cards you get free of charge when you buy something or in exchange for points (or any other reward system) are not covered by the rules described in this article.

Refundable Balance

If you ask for it, a merchant must refund in cash any amount less than $5 remaining on a prepaid card, except for a cell phone card or a prepaid credit card.

Balance Protected When Replacing a Card

Your prepaid card can give a specific date when you must have it replaced by the merchant. For example, a company might want all its cards in circulation to have its new design.

The amount remaining on the old card must remain on the card.

And there are other rules too

  • Your card must be replaced free of charge.
  • The replacement date must be written on the card.
  • Right after the date, the card must say that you cannot lose the remaining balance.

Expiry Dates

  • Since June 30, 2010, prepaid cards cannot have expiry dates, except for cell phone cards and cards giving access to unlimited use of a service (e.g., a bus pass).

Note that you have seven days after the expiry date of your cell phone card to “recharge” it in order to preserve any balance on it. Contact your cell phone company to learn more.

  • For card that can be exchanged for specific goods or services, the merchant is allowed to charge the difference between the price of the product or service when the card is used, and what they cost when the card was purchased.
    In these cases, the merchant must indicate this information on the card:
    • the price of the product or services when the card is purchased
    • the date as of which the merchant can charge the difference
    • the fact that the merchant can charge the difference

Wording of gift certificate

Validity

“Good for one pedicure ($35 value). Expires on December 31, 2010”.

This expiry date is not valid. You can get a free pedicure.

“Good for one pedicure. After December 31, 2010, we can ask for any increase in the price of this service.”

This statement is not valid because the value of the pedicure when the gift certificate was purchased is not mentioned. You can get a free pedicure.

“Good for one pedicure ($35 value). After December 31, 2010, we can ask for any increase in the price of this service.”

This statement is valid. If the price of pedicures has increased since the gift certificate was purchased, the merchant can charge you the difference.

Charges for Use, Activation or Non-Use

As a general rule, merchants who sell prepaid cards cannot charge a fee for you to get, activate or use them.

Exceptions:

  • prepaid credit cards
  • fees to personalize a card (design, name, etc.)
  • fees to replace a lost, damaged or stolen prepaid card

Also, cards that give access to several different businesses – a card for a shopping centre, for example – can have these fees:

  • activation fees of up to $3.50, which must be mentioned on the card
  • non-use fees of up to $2.50 per month, as long as certain information is mentioned on the front and back of the card. Also, the merchant must wait for 15 months after the card is purchased to charge you non-use fees. Also, if before the end of the 14th month you ask the merchant to wait until the 18th month to collect these fees, the merchant must wait until the 18th month.

Example

Front

A statement drawing the consumer’s attention to the back in letters no smaller than 10-point print.

Back

  • amount of the non-use fee
  • a statement that the merchant cannot charge the fee before the 15th month
  • a statement that the merchant cannot charge a fee before the 18th month if the consumer so requests before the end of the 14th month
  • name of the merchant who should be contacted to make this request