Canada: Gift Card Litigation: Recent Developments

Last Updated: June 27 2016
Article by Timothy Banks

Many retailers and shopping centre landlords use gift cards to build brand loyalty. These prepaid purchase cards come in a variety of types. They can be reloadable or not. They may be "open-loop" stored-value cards that can be used at any location that accepts network cards (such as Visa or MasterCard). Or, these cards can be "closed-loop" in which case they can only be used at a network of stores of the same brand or at a single location.

Provincial consumer protection regulations across Canada contain specific requirements for suppliers of prepaid cards. Generally, these cards do not expire and fees are strictly limited to replacing or customizing gift cards. Although fees for open-loop cards are possible, these fees are subject to prescribed maximums. In addition to federal regulations, there are federal Prepaid Payment Products Regulations that apply to products issued by federally-regulated financial institutions.

This year is proving to be an important year for prepaid card litigation. Two important decisions have already been rendered in Ontario and British Columbia. In Ontario, the Court of Appeal concluded that it was possible to structure a prepaid services card to expire, notwithstanding prohibitions on expiry in the Consumer Protection Act, 2000 (Ontario) (CPA). On the west coast, the British Columbia Supreme Court concluded that open-loop stored-value cards issued by certain credit unions and others were regulated under the Business Practices and Consumer Protection Act (British Columbia) (BPCPA). However, the court declined to certify a class action regarding alleged non-compliance with the BPCPA for other reasons.

Prepaid services can expire

In Ontario, a "gift card" is any voucher that is issued under a gift card agreement that can be applied towards the purchase of goods or services. A "gift card agreement" is any agreement in which the purchaser pays in full at the time of entering into the agreement for goods or services that will be supplied in the future. Unless the gift card is issued for a specific good or service, or is issued for a charitable purpose, the gift card cannot have an expiry date.

Like many telecommunications carriers, Bell Mobility sells prepaid cards for mobile phone services. Subscribers are able to top-up their accounts when the balance of credits for unused minutes/texts or other services fall below a set threshold or the plan is about to expire. Under the plans, the subscriber would activate the purchased credits for the plan period. While there is no expiry date on the prepaid card used to activate the plan, once activated, the services would only be available for the plan period. The subscriber forfeits any unused minutes unless the subscriber extends the plan by purchasing more credits.

In Sankar v. Bell Mobility Inc., 2016 ONCA 242, the proposed class action plaintiff sought to certify a class action proceeding to challenge the expiry of the plan credits, among other things. The court rejected the plaintiff's argument that the expiry and forfeiture of credits violated the CPA. The court concluded that the regulations prohibit an expiry date on the prepaid card itself. It was perfectly acceptable under the regulations to impose an expiry date on the goods or services purchased with the prepaid card. The court characterized the purpose of the gift card regulations as prohibiting the expiry of a future performance agreement before the seller has delivered the goods or performed the services promised under the agreement. The services themselves could be time limited. The court gave the example of the use of a gym for 30 days after the activation of a membership. The court concluded that what Bell Mobility had agreed to provide under the agreement was access to the purchased wireless services within a defined period. The card didn't expire; access to the services did. Bell Mobility had fulfilled its obligations once it made the services available for the defined period.

Open-loop stored-value cards caught by BC Regulations

On March 3, 2016, the British Columbia Supreme Court rendered a decision in Jiang v. Peoples Trust Co., 2016 BCSC 368, which brought good news and bad news for BC credit unions and other financial institutions offering open-loop stored-value purchase cards. The plaintiff was alleging violations of the BPCPA by numerous financial institutions in respect of their stored-value cards. Among the complaints were that the stored-value cards had expiry dates, and the defendants charged fees in excess of limits under the regulations and failed to provide the required information about the cards.

The BPCPA defines "prepaid purchase card" as "a card, written certificate, or other voucher or device with a monetary value that is issued or sold to a person in exchange for the future supply of goods or services to a consumer [...]." The regulations made under the BPCPA prohibit an expiry date and state that a prepaid purchase card with an expiry date is "redeemable" as if it did not have an expiry date.

The proposed class representative had purchased a non-reloadable card from a retailer. The card was an open-loop card issued by a financial institution and accepted on the Visa network. The defendants argued that the sale of a stored-value card was not "in exchange" for any future goods or services. It was simply stored value that could be used on the Visa network. Further, the defendants argued that the reference to the word "redeemable" seemed to suggest that the anti-expiry regulations were meant to apply to gift cards for goods and services from a merchant rather than a stored-value card that could be used anywhere the stored-value card was accepted. Indeed, neither the Minister of Public Safety, and Business Practices and Consumer Protection, nor the British Columbia Consumer Protection Authority took the view in their explanation of the law that these types of stored-value cards were subject to the regulations. Moreover, this was consistent with answers given in the Legislature by the government about the regulations.

The motions judge did not accept this argument and held that the plaintiff had a reasonable cause of action. However, ultimately the court held that a class action was not a preferable procedure for handling the dispute because there was no way of determining whether someone acquired one of the defendants' stored-value cards for personal or business purposes. This individual issue would need to be decided in each case. Ultimately, for this reason, the court refused to certify the class action.


While the Ontario Court of Appeal's decision on expiry dates for fixed-term services in Sankar is good news for retailers and suppliers, Dentons recommends caution in invoking expiry dates for goods and services made available under a prepaid purchase card. Sankar may be distinguishable. The credits in that case represented maximum usage of a service during a defined period. Retailers and suppliers are well-advised to check with legal counsel before implementing this type of arrangement.

While the defendants in the Jiang case may have avoided the defendants facing a class action, the court's willingness to sweep in all stored-value cards into the regulations irrespective of whether they are simply general purpose is a strong signal for financial institutions to look carefully at their compliance with gift card regulations across the country.

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Specific Questions relating to this article should be addressed directly to the author.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions