In a class action certification motion decision, (Jiang v. Peoples Trust Company 2016 BCSC 368), the Supreme Court of British Columbia concluded that general purpose network-branded prepaid cards are subject to the provisions of British Columbia's consumer protection legislation, the Business Practices and Consumer Protection Act (BPCPA). The Court, however, denied certification to the plaintiffs for the action proceed as a class action on the basis that the class of plaintiffs could not be identified by reference to "consumers". A prepaid card may be acquired for either personal or business use and an individual inquiry for each card would be needed to determine whether the card was acquired for personal or business reasons. As such, the Court concluded that it was not possible to define the class with reference to objective criteria that establish whether each member is a consumer under the BPCPA. As the decision turned on problems with the class definition, this decision may be of interest to both plaintiffs' and defendants' class action lawyers.
With respect to the Court's conclusion that general purpose network-branded prepaid cards are subject to the BPCPA, the following points may be of interest to those involved in the issuance and supply of general purpose prepaid products:
- The Court referred to statements in the Hansard (the record of debates in the legislature) made by the responsible Minister before the legislation was passed and to statements made by the regulator, the Business Practices and Consumer Protection Authority (the Authority), after the legislation was passed to the effect that network-branded cards would not be subject to the prepaid card provisions of the BPCPA.
- However, the Court concluded that these statements were based on the Minister's and the Authority's views that network-branded cards fall outside of provincial jurisdiction and that this was an incorrect view of the law. As such, the Court determined that the statements of the Minister and the Authority in this regard should not be given any weight.
- The Court did not refer to the decision of the Supreme Court of Canada in Bank of Montreal v. Marcotte (2014 2 SCR 725), in which the Supreme Court of Canada considered in depth whether provincial consumer protection disclosure requirements apply in respect of credit cards issued by banks. Although the Supreme Court of Canada in Marcotte decided on the facts of that case that the Quebec consumer legislation did apply, it did not close the door on constitutional arguments to be made by federally regulated financial institutions, particularly where there is both federal and provincial legislation that address the same or a similar activity.
- However, in Jiang, the Court did not engage in any constitutional analysis as to whether prepaid cards issued by federally regulated financial institutions are subject to provincial legislation. The Court concluded that that the cards issued by the defendants were subject to the BPCPA; it did not specifically state that cards issued by federal institutions are subject to provincial law (although this may be inferred from its conclusion). The defendants in Jiang include two banks and a trust company (each of which are subject to federal financial institutions legislation, including the federal Prepaid Payments Products Regulations) but also include two credit unions, which are provincially regulated.
As the action was not certified to proceed as a class action, the end result is in favour of the defendant institutions, even though the Court's conclusion that network-branded branded prepaid cards are subject to the BPCPA may be viewed negatively by federally regulated financial institutions that issue prepaid cards. If the plaintiffs appeal the certification decision, it is possible that a response by the defendants (or some of them) could include an argument that provincial law does not apply to their cards. Otherwise, an analysis of the constitutionality of provincial prepaid card legislation as it applies to federally regulated institutions will have to wait for another case.
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