Financial Consumer Agency of Canada

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4. > Negative option billing

Negative Option Billing: Your Rights and Responsibilities

Federally regulated financial institutions must obtain your consent before charging you for a new optional product or service, such as:

• optional insurance coverage on a loan or credit card, or

• overdraft protection.

The financial institution cannot assume your consent simply because you have used the new optional product or service.

The financial institution must also provide you with certain information both before and after you provide your consent.

All communications seeking your consent must be clear, simple and not misleading.

Your rights

Before you agree to sign up for an optional service or product

Before you agree (verbally or in writing, in paper or electronic form) to sign up for an optional product or service, the financial institution must provide you with a summary (written or verbal) that contains the following information about the optional service or product:

• a description of the product or service

• the terms of the agreement

• how to cancel the product or service

• all related fees and costs for the product or service, or information about how the fees will be calculated

• an example to illustrate the method.

If you consent verbally, the financial institution must provide you, without delay, with written confirmation of your consent for the new product or service. The financial institution may also provide this confirmation electronically if you so choose.

After you agree to sign up for an optional service or product

After you agree (verbally or in writing, in paper or electronic form) to sign up for a new optional product or service, the financial institution must, within 30 days, provide you with a document containing complete information about the related terms and conditions.

In addition to the information required to be provided to you before you agree, this document must also include:

• the date from which the product or service is available to you and, if different, the date from which charges apply

• steps you have to take to use the product or service.

If you sign up for a product or service that is offered on an ongoing basis, such as monthly overdraft protection, the document must also specify that you may cancel the product or service by notifying the financial institution that you wish to cancel it.

If you consent verbally, the financial institution must provide you, without delay, written confirmation of your consent for the new product or service. The financial institution may also provide this confirmation electronically if you so choose.

Promotional offers

Some financial institutions will offer a promotional, preferential, introductory or special offer when you first sign up for an optional product or service.

• If the promotional offer expires after a set time, for example three months, then at least 30 days before the offer expires, the financial institution must advise you of:
  
  
  • the date on which the offer will end
    
    
  • the date on which charges will begin for the use of the optional product or service after the offer ends.

• If the promotional offer expires after a set amount of use, for example ten times, the financial institution must advise you, without delay, of:
  
  
  • the fact that the offer has come to an end
    
    
  • the method for determining the fees and costs if you continue to use the optional product or service.

• For example, if a promotional offer ends when you have used the product or service 10 times, then the financial institution must provide you with the information above, without delay, after you have used the product or service for the tenth time.

Cancelling an optional product or service

If you cancel an optional service or product:

• the cancellation will be effective as of the last day of the billing cycle, or 30 days after the financial institution receives your notification to cancel the optional product or service, whichever is earlier

• the financial institution can only charge you for the amount of time that you actually used the service or product.

If you are owed a refund or credit as a result of cancelling the optional service or product, the refund or credit must be:

• as of the date of cancellation

• returned to you without delay.

Notice of changes

If a financial institution makes changes to the terms and conditions of an optional product or service, the financial institution must provide you with written notice of changes to the terms and conditions at least 30 days before the change takes effect.

What you should do if you feel your rights are not being respected

If you feel that a federally regulated financial institution is not respecting your rights, contact FCAC.

You can also use FCAC’s complaint-handling process tool to learn about the steps to take to file a complaint with your financial institution.

Date Modified:

2012-07-09