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Hidden camera reveals how bank employees mislead and upsell on pricey credit card insurance

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A Marketplace hidden camera investigation is raising questions about how bank employees are selling a pricey and controversial product marketed to help with credit card payments if you lose your job or get sick.

It’s called credit card balance insurance, or balance protection insurance — and if you’ve signed up for a credit card, chances are you’ve been asked to buy it.

But many experts say the insurance comes with high fees — typically a percentage of a cardholder’s outstanding balance — and so many exclusions it can be hard to make a successful claim.

« If it mostly disappears from the market, that’s a good thing, » said John Lawford, a consumer rights lawyer and executive director of the Public Interest Advocacy Centre (PIAC).

« It’s expensive, it doesn’t cover a lot of situations, and it pays out a very small amount most of the time, » he said. « It really is garbage. »

Marketplace took a hidden camera inside some of Canada’s biggest banks — visiting Bank of Montreal, CIBC, Royal Bank and Scotiabank branches in the Toronto area — to investigate how bank employees marketed balance protection insurance when a customer signed up for a new credit card.

It revealed employees using questionable tactics or confusing and inaccurate information to sell the insurance at all banks but one.

RBC was the only bank where Marketplace was not offered the product during the hidden camera investigation.

CIBC: Added insurance without permission

In a confusing exchange, the employee at CIBC had already added the insurance to a credit card before there was a chance to decline the balance protection.

« You can delete it any time you want, » she said. « It’s easy. You just have to pick up the phone and call. That’s it. »

A look at why balance protection insurance is called ‘high risk’ for consumers:​

It’s expensive, doesn’t cover a lot of situations, and it pays out a very small amount most of the time. So why are banks selling it? CBC Marketplace goes undercover to find out. 2:09

After she was told to delete it, the employee acknowledged she should have asked first before adding the product to the credit card.

In a statement to Marketplace, CIBC wrote that the interaction « does not reflect our expectations or practices. If an issue is identified, we investigate immediately and take appropriate action to address the situation. »

BMO: No knowledge of product

At BMO, an employee seemed to have little grasp of the insurance product she was selling, struggling to explain balance protection insurance when asked to describe what it was.

« It’s an insurance … balance, » said the employee, before grabbing a brochure about the product and reading aloud from it.

BMO told Marketplace it takes any concerns from customers « seriously » and has « processes in place to review and address them when they are raised. »

Many financial experts say credit card balance insurance comes with high fees and so many exclusions it can be hard to make a successful claim. (CBC)

Scotiabank: Misinforms about coverage

At Scotiabank, an employee provided inaccurate information about what the insurance covered, claiming that the bank would pay off an entire credit card balance if someone lost their job.

Scotiabank’s balance insurance only pays 10 per cent of an outstanding balance — up to $5,000.

In a statement to Marketplace, Scotiabank wrote that its « employees receive ongoing training on our available creditor insurance solutions. »

‘We are misleading the client’

Multiple customer service representatives from Canada’s big banks have described the aggressive and questionable tactics used to get people to sign up for the insurance.

« We are misleading the client, » one employee at a big bank told Marketplace. Marketplace is not naming the employee, who fears he could lose his job for speaking out.

  • Watch the hidden camera investigation on Marketplace at 8 p.m. Friday on CBC TV and online.

The bank employee said he and his colleagues are under pressure to meet sales targets by trying to sell credit card balance insurance to every customer who takes out a credit card.

« Balance protection is something that’s a scam, » he said. « It’s just something to take clients’ money. »

It’s estimated that millions of Canadians pay for insurance on their credit cards. (CBC)

He and his colleagues would sometimes sign customers up for products like credit card balance insurance without their knowledge, the employee said.

Other times at his bank, he said, they wouldn’t tell customers the insurance was optional — even though they are legally required to do so. « So for example, we’d say … ‘This credit card comes with insurance,' » he said.

Sales reps often also don’t have a full understanding of the product they’re selling and are told to stick to a script, the employee said.

One example from that script involved citing examples of people who signed up for balance protection and were covered by the insurer after making a claim, he said.

But he said he’s witnessed many clients come into the branch to make a claim and get denied.

‘High risk for consumers’

Marketplace also spoke to a number of unhappy customers with Canada’s big banks who said employees signed them up for balance protection without their knowledge or misrepresented the product.

In one case, TD refunded a customer more than $6,000 after he said he had been unknowingly signed up for the insurance and had been paying a premium for years.

PIAC executive director John Lawford says credit card balance insurance isn’t worth it for consumers, calling it ‘pure profit’ for the banks. (CBC)

Last year, the Financial Consumer Agency of Canada (FCAC) conducted a six-month review of sales practices inside the big banks — an investigation prompted after more than 3,000 current and former employees from all the major banks wrote to CBC’s Go Public about the pressure to push products to meet sales targets.

In May, the consumer watchdog warned a parliamentary committee that it had found credit card balance protection « problematic, » saying the tactics used to sell the product were a « high risk » to consumers and that the insurance was « often sold without the appropriate explanation of how it works. »

Despite FCAC finding some evidence of misleading sales tactics, none of Canada’s financial institutions have been fined.

Advocate wants credit card insurance gone

After reviewing the findings of Marketplace’s hidden camera investigation, Lawford said he was struck by how the bank employees really didn’t seem to understand the product they were selling.

He said he hopes Canada’s financial institutions will follow the lead of other major banks around the world that have stopped selling the balance protection insurance, such as the Bank of America and Australia’s Commonwealth Bank.

Regulators in the U.S., Australia and the U.K. have collectively fined banks billions for misleading consumers, including similar practices.

Meanwhile, the Canadian government has tabled new legislation that, if passed, would create a more robust consumer protection framework, similar to ones that have existed for years in both the U.S. and the European Union.

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Anglais

‘Business as usual’ for Dorel Industries after terminating go-private deal

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MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

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Anglais

Pandemic funds helping Montreal businesses build for a better tomorrow

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Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.

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Anglais

Downtown Montreal office, retail vacancies continue to rise

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Some of downtown Montreal’s key economic indicators are heading in the wrong direction.

Office and retail vacancies in the city’s central core continued to climb in the fourth quarter of 2020, according to a quarterly report released Thursday by the Urban Development Institute of Quebec and the Montréal Centre-Ville merchants association. The report, whose first edition was published in October, aims to paint a socio-economic picture of the downtown area.

The survey also found office space available for sublet had increased during the fourth quarter, which may foreshadow even more vacancies when leases expire. On the residential front, condo sales fell as new listings soared — a sign that the downtown area may be losing some of its appeal to homeowners.

“It’s impossible not to be preoccupied by the rapid increase in office vacancies,” Jean-Marc Fournier, the former Quebec politician who now heads the UDI, said Thursday in an interview.

Still, with COVID-19 vaccinations set to accelerate in the coming months, “the economic picture is bound to improve,” he said. “People will start returning downtown. It’s much too early to say the office market is going to disappear.”

Public health measures implemented since the start of the pandemic almost a year ago — such as caps on office capacity — have deprived downtown Montreal of more than 500,000 workers and students. A mere 4,163 university and CEGEP students attended in-person classes in the second quarter, the most recent period for which figures are available. Border closures and travel restrictions have also brought tourism to a standstill, hurting hotels and thousands of local businesses.

Seventy per cent of downtown workers carried out their professional activities at home more than three days a week during the fourth quarter, the report said, citing an online survey of 1,000 Montreal-area residents conducted last month.

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