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Thursday, April 17, 2014
Saskatchewan Justice

The Consumer Protection Act "Pre-Paid Purchase Card" Provisions

Q. Does the legislation regulating pre-paid purchase cards including gift cards apply to cards purchased before November 10, 2008?
A. The rules apply to pre-paid purchase cards including gift cards and gift certificates purchased on or after November 10, 2008.

Q. What is the definition of a pre-paid purchase?
A. Clause 77.10 (c) of The Consumer Protection Act: reads a " ‘prepaid purchase card' means, subject to the regulations, an electronic card, written certificate or other voucher or device with a monetary value, that is issued or sold in exchange for the future purchase or delivery of goods or services, and includes a gift card and gift certificate".

Q. What are examples of a pre-paid purchase card?
A. Examples include gift cards or gift certificates bought at retail outlets, multi-use recreational or entertainment vouchers, pre-loaded money cards (that do not have a cash back feature) branded or issued by credit card companies, and pre-paid vouchers, passes or tickets that can be redeemed for goods or services sometime in the future. Note the legislation is not intended to apply to tickets bought for a date specific event or to time limited membership cards (e.g. a membership for a year would be valid for that year only, a monthly, multi-pass membership is good for that month only).

Q. Can restrictions be imposed on the use of a pre-paid purchase card?
A. An issuing organization can protect itself against rising prices in future years by attaching the condition that the value of the card is limited to the purchase price. Usage can also be limited to specific days or time of the season, but the card cannot expire. If there are conditions (other than expiry dates or inactivity fees which are prohibited), the consumer must be provided with a description of all restrictions or limitations that the issuer or seller imposes on the use of the prepaid purchase card at the time the card was issued or sold. The organization could also refund the purchase price of the unused portion. In all cases, the "face value" must be honoured.

Q. Are there any exceptions to the rule that pre-paid purchase cards, including gift cards and gift certificates, cannot have an expiry date?
A. An expiry date is allowed for a pre-paid purchase card, including a gift card or gift certificate, that is issued for charitable purposes or where the consumer has provided nothing of value for the card.

Q. Are there any exceptions to the rule that there can be no fees charged for pre-paid purchase cards, including gift cards?
A. Fees are allowed where a card is issued for charitable purposes or the consumer has provided nothing of value for the card. Fees are also allowed to customize a pre-paid purchase card including a gift card or gift certificate, and to replace a lost or stolen card.

Q. Do these rules apply to pre-paid telephone cards?
A. Yes. It is the position of the Consumer Protection Division that the legislation is of general application and applies to pre-paid telephone cards. If the card is activated and used to keep open a phone line for a period of time, the card is only good for that period even if associated talk or text time usage is not fully utilized. If the card is not so activated, it does not expire.

Q. Do these rules apply to pre-loaded money cards branded or issued by credit card companies?
A. Yes, unless the card has a cash-back option as noted above. It is the position of the Consumer Protection Division that the legislation is of general application and applies to pre-loaded money cards co-branded or issued by credit card companies, but only if that card does not allow the consumer to access cash from the card. Generally non-reloadable money cards do not have a cash back option. In contrast, re-loadable cards tied to an individual consumer may allow the holder to retrieve cash from the money card. If the card has a cash back option, the ‘prepaid purchase card' rules do not apply to such cards and service charges or other fees are not prohibited.

Q. Some pre-loaded money, non-cash back cards branded or issued by credit card companies charge an activation fee. Is this permissible?
A
. The Consumer Protection Division takes the position that an activation fee is permissible only at the time of purchase, not afterwards, and must be paid in addition to the amount of the "face value" purchased. That is, the activation fee cannot be deducted from the loaded amount once the card is owned by the purchaser. Additionally, the consumer must be informed of that fee beforehand and must have the option to decline the purchase of the card. Once the card is purchased, the "face value" of the purchase must be fully honored and thereafter fees, including activation, dormancy or inactivity fees, are prohibited.

For example, if the merchant indicates that to acquire a $50 card, the consumer must tender $50 plus a $5 activation fee, the consumer has the choice to accept or decline the purchase. In such cases, if accepted by the consumer, the merchant can use the additional $5 for activation. On the other hand, if the merchant sells a consumer a $50 card and does not request an additional fee prior to the purchase, once the card is owned by the purchaser, an activation fee is not permitted even if the merchant indicates otherwise; in such cases, the full $50 must be available to the consumer for other uses without further activation or other charges.

Q. What if a consumer buys a card that has an expiry date?
A. Many retailers currently have a stock of cards that show an expiry date. They can sell the cards they already have, even if they show an expiry date. But the expiry date cannot be enforced on cards bought on or after November 10, 2008. We suggest that consumers keep their receipts as these show the purchase date. We encourage businesses selling a pre-paid purchase card after November 10, 2008 to advise customers that any expiry date on the card does not apply.

Q. Where can I go if I have a pre-paid purchase card including gift card or gift certificate and the business is not complying with these rules?

Consumer Protection Division
500 - 1919 Saskatchewan Drive
REGINA SK  S4P 4H2
Phone: 306-787-5550
Toll Free:  1-877-880-5550
Fax: 306-787-9779



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