CBC’s flagship consumer protection program Marketplace will air an episode on the growing problem of counterfeit goods – a topic that was the focus of recent Consumers Council of Canada research.
The Friday, February 21, episode Counterfeit Crackdown is designed to help consumers spot the difference between real and fake goods. The program’s teaser also adds: “And we ask: who’s protecting you from buying counterfeit and sometimes dangerous products online?”
The report also found that consumers doubt many of the established facts about the size and economic impact of counterfeit and pirated goods. Consumers are also generally not aware of where they can report counterfeit operations and sales, yet survey and focus group respondents expressed a willingness to report such activities.
Lots of options exist for consumers to report problem goods and services, in fact. But the rewards of reporting by the individual consumer often amount to little more than satisfaction, and can be complex and time consuming, even expensive. To obtain redress, Canadian consumers are commonly on their own, as demonstrated by The Complaint Roadmap page of the Office of Consumer Affairs, Innovation Science and Economic Development Canada.
Canadians can tell policymakers whether two recent arrests related to alleged telephone tax scams actually result in a drop off of similar scam calls.
In its release announcing the arrests of a Brampton, Ontario, couple, the Royal Canadian Mounted Police reminded Canadians that if any caller asks for personal or banking information, then they should report the activity to the Canadian Anti-Fraud Centre (CAFC) through its website at www.antifraudcentre.ca, or by telephone at 1-888-495-8501. E-mails or texts making suspicious tax claims should not be acted upon, and referred to CAFC instead. March will be Fraud Prevention Month in Canada, and the RCMP estimated that between 2014 and 2019, the CRA scam – callers identify themselves as CRA or RCMP officials and threaten victims into paying non-existent taxes or penalties – has resulted in reported victim losses of $16.8 million. Including similar scams where callers claim to be bank investigators or computer tech support experts, total reported victim losses exceed $30 million.
On February 12, the RCMP arrested a Brampton, Ontario couple following a multi-year investigation into the India-based CRA scam during which investigators uncovered “money mules” and managers operating in Canada who collect the funds from these scams and assist with laundering these funds. The couple is charged with fraud, laundering the proceeds of crime and having property obtained by crime. A search of the couple’s home resulted in the seizure of $26,000 in cash, $114,000 in jewelry, a cash-counting machine and envelopes allegedly sent by scam victims containing money they believed they owed.
Insp. Jim Ogden told a news conference that the RCMP had “disrupted the necessary flow of money from Canada to India, which will have a big impact on the operation and the bottom line of the scammers.” Ogden indicated that other arrests “may be forthcoming”, but did not say whether there were other “money mules” operating in Canada.
The RCMP release also noted that the scam has led some Canadians to be wary or suspicious when legitimate CRA representatives contact them.
CBC’s Marketplace program, which helped spur the investigation with its programming for more than two years, included video of the arrests, along with earlier episode recaps in a recent broadcast.
Consumers Council of Canada president Don Mercer applauded the RCMP action, but added that damage has already been done to Canadian trust of commercial and government communications.
“Canadians want the government to protect them from the kinds of attacks they have faced, and expect governments to lead in requiring telecommunications service providers to harden their networks against abusers,” Mercer said. “Sadly, fending off fraudsters has been allowed to become a ritual of life in Canada."
Canadian banks are generally effective at resolving straightforward consumer complaints, but much less effective in handing more complex complaints, according to research released today from the federal government’s Financial Consumer Agency of Canada (FCAC).
The FCAC was tasked with reviewing bank consumer complaint processes by the Minister of Finance in 2018. The research was conducted between November 2018 and June 2019 and evaluated the effectiveness, accessibility and timeliness of complaint handling at Canada’s six largest banks. It also included a survey of 5,000 Canadians who have a bank account or credit card. The report provided a summary of banks in the aggregate, with no rankings or focus on individual banks.
The report estimates that more than 5 million consumers bring at least one complaint to a bank each year. Bank procedures are “generally effective, accessible and timely for relatively simple complaints that can be resolved at the first level,” the report said. But when consumers escalate a complaint to higher levels, banks do not have policies and procedures to handle escalated complaints consistently, they do not monitor, assess or improve their procedures, and training programs are largely informal.
On accessibility – whether consumers know how and where to complain – consumers find it difficult to escalate complaints beyond the first level, and banks do not provide consumers with the information they need to do so.
On timeliness – whether complaints are resolved within acceptable timelines – most first-level complaints are handled reasonably, but most banks fail on escalated complaints because of inefficient bank procedures that lead to consumer fatigue and consumers dropping complaints before they are resolved.
The research also found that banks:
have inadequate procedures to collect feedback from higher-level complaints.
have inadequate procedures to handle complaints objectively. Few have implemented reimbursement policies that provide employees with clear guidelines, and the employees who handle complaints at the first level may not be impartial, because of pressure to make sales and control costs, particularly in the absence of clear policies.
fail to set clear parameters on whether and when to consider the business relationship – how long the customer has been with the bank, how large their account is, etc. Complaint resolution sometimes depends on who the consumer is and not on the harm the bank error may have caused.
inadequately provide annual training regarding complaint handling.
require consumers who escalate complaints to higher levels to resubmit complaints, provide documentation a second time, in part because banks do not have reliable record-keeping.
routinely fail to advise consumers of their right to take external complaints to their third-party dispute resolver if they are not resolved within 90 days. In fact, some banks have misleading letter templates that suggest consumers cannot do this.
A parallel report also released February 19 evaluated the effectiveness of external complaint bodies retained by banks.
Canadian consumers are not well served by the ability of banks to choose their own dispute resolution firms, according to a report from the Government of Canada's Financial Consumer Agency of Canada (FCAC).
FCAC released its review of bank complaint handling and the effectiveness of external dispute resolution firms on February 19. Canadian banks have been allowed to choose third-party firms to provide dispute resolution rather than be required to use the Ombudsman for Banking Services and Investments (OBSI), which was established to serve that purpose. Royal Bank (since 2008), TD Bank (2011), National Bank (2017) and Scotiabank (2018) have all opted to use ADR Chambers Banking Ombuds Office (ADRBO).
FCAC's review took place between November 2018 and June 2019, after a request by the Minister of Finance in 2018. The report evaluates the operations of OBSI and ADRBO against FCAC-established rules. By most measures, FCAC evaluates OBSI most favourably, and the report's criticism of ADRBO is quite severe in some instances.
In addition, the FCAC report explicitly questions whether the competition between these firms for member banks benefits consumers. It notes that “only two of the large six banks have elected to be members of the (dispute resolver) that compares most favourably to international best practices.” It also observes that having multiple dispute resolution firms adds confusion to consumers, complexity and inefficiency, and makes regulatory supervision more complicated and resource intensive. “FCAC also has concerns about how allowing banks to choose the [dispute resolver] negatively affects consumers perceptions of the fairness and impartiality of the system. Finally, the Agency questions whether the one-sided competition between [dispute resolvers] for member banks is accruing benefits to consumers.”
Consumers brought more than 5 million complaints to banks in 2018, most of which were dealt with by the banks’ own complaints-handling staff. External complaint firms investigated just over 500 complaints that banks were unable to resolve. FCAC found that while the external firms “meet most of the requirements, there are deficiencies.”
FCAC’s report evaluated the industry as a whole, and the two firms comparatively, on a number of dimensions. On most dimensions, its evaluation was more favourable to OBSI. Here are a few examples:
On timeliness, it found that ADRBO averaged 156 days and OBSI 112 days to propose final recommendations. Consumers found the delays frustrating, and FCAC specifically flagged ADRBO’s initial view process as too lengthy.
ADRBO was cited as not meeting expectations for reporting complaints lodged against it by consumers. “FCAC observed a significant number of issues raised by consumers about a perceived lack of timeliness, impartiality and accessibility.”
ADRBO’s procedures for ensuring that it conducts investigations in an impartial and independent manner “are neither adequately detailed or sufficiently comprehensive.”
While OBSI “demonstrates a strong commitment to effective complaint resolution”, ADRBO is “not meeting expectations for effectiveness."
Neither organization meets expectations for identifying and reporting issues that may affect a large number of consumers.
OBSI was described as transparent and thorough in its consultations with complainants, banks and regulators and was said to consult openly and widely with consumers and consumer representatives. ADRBO does survey banks and complainants, but “it does not appear to use the surveys to identify areas for improvement. Nor does ADRBO regularly perform additional consultations with consumers or consumer representatives.”
While OBSI has well-developed investigation protocols, ADRBO “does not provide its investigators with detailed instructions or guidelines.”
Minister of Finance Bill Morneau, who requested the report in 2018, said the Department of Finance Canada would launch public consultations in spring 2020 to “address the findings of these reports and look at how to strengthen the external complaints bodies system in Canada.”
Consumers Council of Canada has published a number of papers on the issue, including a discussion paper in 2018 that favoured making OBSI a single dispute resolution provider, and called the policy that allowed firms to select their own arbiters “a flawed policy that has led to an uneven playing field among banking competitors and between banks and consumers.” In a public statement that year, Council chairman Don Mercer said “the federal government needs to protect bank customers by mandating a single impartial, non-profit external complaints body – a right that should be restored to them promptly.”
Canadian consumers view older forms of dynamic pricing as more fair than some of the newer technologically-enabled forms of changing prices for different consumers.
A Consumers Council of Canada report on Dynamic Pricing showed that older practices such as seniors discounts and loyalty programs are seen as more fair than newer practices that alter prices based on web sites visited or other factors.
The research defined dynamic pricing as offering identical or similar products or services to different customers at different prices. It based its results on a series of focus groups and online surveys of Canadians. Survey participants were asked to evaluate the fairness of 10 different dynamic pricing types, collected into three groupings.
Of the three groupings, traditional types of dynamic pricing – lower pricing for seniors, volume discounts to frequent customers and loyalty programs – were most positively received. Yet even as well established as those practices are, consumers do not consider them exceptionally fair. Though almost all Canadians participate in some form of loyalty program, only 45 per cent of respondents found them as fair to the consumer.
Survey responses to a suite of practices that use technology to provide dynamic pricing showed a “fair” rating from 20 per cent of respondents, “unfair” by 30 per cent and the remainder more neutral. Practices in this category included Uber surge pricing (higher prices during peak times of activity), and differently priced sports tickets based on the quality of opponent and date of the game.
Participants were most negative towards the fairness of dynamic pricing based on demographics, behavioural or personal information. Examples included hotel chains offering different prices for identical rooms to different intermediaries that serve different clientele, or travel sites that track web browser cookies and raise prices for those visiting the site a second or third time, assuming they have a higher interest in purchasing. The latter scenario had the lowest level of fairness evaluated by the survey participants, with 41 per cent strongly disagreeing with the fairness of the practice and 65 per cent disagreeing at least somewhat.