The Edmonton woman needed to fix her credit score after getting divorced, so she signed up for a secured credit card that promised to help her do that.
Instead, she’s out thousands of dollars, and left with a credit score that’s worse than when she started.
McCall, 59, is one of many cardholders stuck in the middle of a bitter legal battle between the credit card company and the bank it partnered with, Calgary-based Digital Commerce Bank, also called DC Bank.
She signed up for the Visa through Plastk Financial & Rewards after seeing it recommended on Credit Karma, a website she trusted.
Plastk promises cardholders the chance to improve their credit scores by reporting their transactions to the credit bureau Equifax.
As a secured card, the credit limit matches whatever customers prepay for a security deposit — between $300 and $10,000.
Plastk founder and CEO Motola Omobamiduro launched his company in October 2020, and partnered with Calgary-based Digital Commerce Bank. (Jenn Blair/CBC)
Plastk says customers can cancel any time and get their deposit back after a two-month holding period if the account is in good standing.
After cancelling in December, McCall was expecting $4,500 to be returned in February. Without it, she’s had to borrow from family and friends to pay for the basics.
“It was extremely humbling — $4,500 is not a little amount of money, especially for someone like myself. It’s huge,” she said.
“That was going to pay my next two months’ rent, buy my food.”
After Go Public brought McCall’s case to the company’s attention, Plastk refunded her entire deposit — four months after she was supposed to get it back.
Plastk Visa customers out thousands after deal between businessman and bank goes bad
8 hours ago
Duration 2:20
Customers who signed up for a Plastk secure credit card tell CBC Go Public they’re out thousands of dollars after not getting their security deposits back, something the business owner blames on the bank he partnered with.
Plastk has 7,000 customers across Canada. Go Public spoke to a dozen — hundreds more have posted complaints online — who say they too are out hundreds or thousands of dollars.
Gail Henderson, an expert in consumer finance, says consumers who use secured credit cards backed by non-bank lenders need to be better protected.
Credit cards backed by bank lenders are heavily regulated by the federal Financial Consumer Agency of Canada (FCAC), she says, but cards offered by organizations that are not banks — such as Plastk — have fewer regulations and are overseen by general provincial consumer protection branches.
The FCAC warns consumers to “be careful when applying for a secured card from an unknown financial institution,” and recommends checking with the institution to make sure security deposits are insured.
The agency says, in a report published in June, that non-bank consumer complaints about financial products and services have a much lower rate of resolution than those about banks.
Gail Henderson, an associate professor in the Faculty of Law at Queen’s University, is an expert in consumer finance. (Alexis Raymon/CBC)
The FCAC report also said most surveyed Canadians don’t understand that financial products not backed by banks have less consumer protection.
It suggested that oversight of non-bank products and services ought to be brought up to the stricter level of federally regulated banks and credit unions.
Pedro Oliveira of Hamilton cancelled his Plastk card on Feb. 12 and is still waiting for his $1,000 deposit. After failing to get a resolution with Plastk after about 100 days, he filed a complaint with the Better Business Bureau, then he turned to the government — and got sent in a circle.
“I reached out to Consumer Protection Ontario,” he said, “and they told me to reach out to the Financial Consumer Agency of Canada who told me to reach out to Consumer Protection Ontario.”
Brian Kline of Maple Ridge, B.C., never received his card from Plastk after he sent a $2,500 deposit. In late October he asked to cancel his card, and is still waiting for his refund.
He too reported to the Better Business Bureau, then DC Bank, which sent him back to Plastk. Then he tried the Ombudsman for Banking Services and Investments, which said the matter isn’t under its jurisdiction. He says the Better Business Bureau closed his complaint as unresolved.
DC Bank says the problem with customer refunds is not its responsibility, since it’s not part of the credit agreement between Plastk and its customers. (Google maps)
“In all honesty, I’m not confident in ever having my hard-earned money lawfully returned to me,” he said.
Plastk CEO and founder Motola Omobamiduro says he is trying to pay customers back, but their money is being held up by DC Bank.
Plastk and DC Bank partnered in April 2020. Court documents show their dispute started about two years later when DC Bank said Plastk owed unpaid fees and wasn’t providing the required funds for the bank to pay Visa.
Plastk said the bank was unfairly imposing new rules and fees and that its technology didn’t always work — limiting Plastk’s ability to do business.
Plastk sued for $5 million in January, and DC Bank counter-sued for $3.8 million a few weeks later.
McCall says the real shock was finding out the businessman behind Plastk is a former used car salesman with a conviction for breaking a consumer protection law.
This screen grab of Google reviews, taken on June 7, shows a few of the many online complaints from Plastk customers who say they are waiting for refunds. (Google)
On Nov 4, 2021, Omobamiduro pleaded guilty and was convicted under Alberta’s Consumer Protection Act for not paying off liens on trade-in vehicle sales, leaving his customers with the debt.
Go Public spoke with two former customers, who say that ruined their credit scores.
Omobamiduro says he had nothing to do with failing to pay off the liens; that it was the fault of an employee in B.C.
“It was an employee that did the deal. The partner should have flagged it and stopped it. Unfortunately it went through and as a consequence, you know, I took responsibility,” he said.
Omobamiduro was ordered to pay a total of $22,993 in restitution to his auto sale customers.
McCall says, had she known about the conviction, she wouldn’t have signed up for a Plastk Visa.
Go Public interviewed McCall at her home in Edmonton, where she’s had trouble making rent because of the delay getting her refund. (Sam Martin/CBC)
“I would have never put my own money into this person’s company.”
As for DC Bank, it says it’s not part of customers’ credit agreements with Plastk.
“Plastk is the sole party responsible for this situation,” it said in a statement emailed to Go Public.
Visa Canada also isn’t taking responsibility, saying through a spokesperson that financial institutions that use the its network are “accountable” to their customers and for their business practices.
McCall says she didn’t know where to turn — the entire ordeal was “mind boggling.”
Go Public looked into it and found a complicated web of government departments, who say they can’t help and instead point consumers elsewhere.
Service Alberta and Red Tape Reduction is the regulatory authority responsible for Plastk’s secured credit card.
But when Go Public asked if it received any consumer complaints involving the company, or whether the agency has taken any action on behalf of consumers it didn’t answer the questions.
“One thing that’s missing is a clear path for consumers when they have an issue [with non-bank secured credit cards],” said Henderson, the finance expert.
“At the provincial level, there could be more resources put into more proactive enforcement of those rules that are in place to protect consumers. I think there’s also scope to strengthen those rules and regulations… all Canadians deserve access to a safe and affordable credit card.”
Getting her money back was “a huge relief,” McCall said. “I can pay all the people I owe and my bank credit card off. I am still broke but I owe no one.”
Meanwhile, Omobamiduro says he is working on another deal, planning to move his credit card company over to another sponsoring bank.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
