Our Approaches

OBSI's approach to the six-year limitation period

What is a limitation period?

As a general legal principle, anyone who knows they have a claim against another person is required to make their claim within a reasonable amount of time, or they lose the right to do so. This is because allowing people to hold their claims forever and only bring them forward when they feel like doing so is harmful to the person they are claiming against. Also, it is more difficult to find reliable evidence about things that happened in the distant past. The period of time in which a claim must be brought forward in the courts is known and the "limitation period."

Limitation periods are provincial laws and are a bit different in each province. The limitation period is two years for most court actions in most provinces and three years in Quebec. There are exceptions and it is very important for people with possible claims to get legal advice about the limitation period that applies to them.

OBSI's limitation period

Legal limitation periods don't apply to OBSI. But for fairness reasons, we impose a limitation period on claims that consumers bring to us. Our rule is found in section 5.1(e) of our Terms of Reference (TORs). This limitation period was recommended by an external review in 2012. It was added to our TORs in December 2013 after a public stakeholder consultation process. OBSI's limitation period is six years.

This means that we will only consider a complaint if the consumer raised their complaint with their firm within six years after the consumer knew or ought to have known about the problem. Once the consumer receives the firm's response, he or she must complain to our office within 180 days.

We cannot investigate a complaint, or will stop investigating, if we determine that it is outside this six-year limitation period. If we can determine this before we open the case, we will let the consumer know right away. However, we often need to begin an investigation to be able to determine if a consumer took too long to complain.

When does the six-year limitation period start?

OBSI's limitation period starts on the earlier of:

• The day on which the consumer first knew about the issue or problem.
• The day on which the consumer reasonably ought to have known about the issue or problem.

The day on which the consumer first knew about the problem can be determined by considering when:

• they were first told about the problem
• when they first complained about it
• or when they took action to address the problem (such as selling investments or changing banks)

We determine the day when a consumer ought reasonably to have known about an issue or problem by considering what a reasonable person in the complainant's circumstances, with the complainant's abilities and limitations, ought to have known. This includes a consideration of:

• The nature of the relationship between the consumer, the advisor, and the firm.
• The consumer's level of investment or banking experience, knowledge and sophistication.
• The timing, form and nature of the information provided to the consumer and their ability to understand it.
• Whether and when the consumer raised any concerns with the advisor or firm about the circumstances leading to the complaint, what advice they received, and what action, if any, was taken.

Other time limits may also affect a case

There are a number of other time-based mandate and investigation issues that also need to be considered. Some of these are:

• The firm has had 90 days to consider and resolve the complaint from the time the complainant complained to the firm. This period ends when the firm sends the consumer their final response letter, even if the 90 days has not passed.
• The consumer has to bring their complaint to OBSI within 180-days after receiving the firm's letter.
• Losses associated the complaint may be calculated on a different timeframe, for example:
  • We may open a case that came to us within six years of when the consumer knew or ought to have know of the problem, but their losses may have started many years before that. In that case, we will consider the losses from before the six-year period.
  • We may also end our loss assessment at a time when we believe the consumer should have mitigated their losses.

How the six-year limitation period works

Example 1 - OBSI case not opened

A consumer opened a new bank account in 2010. She was charged account fees of $29.95 per month.

In 2011, the consumer realized that her account fees should have been $14.95 per month. She transferred her money to another bank and closed her account.

In 2019, the consumer contacted her previous bank to complain about the excess fees she was charged. Unsatisfied with the bank's response, she contacted OBSI.

When we first received the complaint, we determined that the consumer had discovered the error and transferred her account away from the firm eight years before complaining to the firm.

Therefore, the case was clearly out of mandate on the basis of our six-year limitation period. We informed the consumer that we would not be investigating their complaint. The consumer was sent a closing letter explaining the reason for our finding.

_{Figure 1: OBSI six-year limitation period elapsed}

Example 2 - OBSI case opened, then closed during investigation

An investor with moderate investing knowledge opened a new account in 2007 and requested guaranteed, low risk investments. Her advisor instead invested the account in medium risk mutual funds.

In 2008, the market experienced a large downturn which significantly decreased the value of her investments. She had believed her investments were guaranteed and knew they should not decline in value. However, all her friends experienced similar losses and her advisor had told her that her investments would come back in value.

In 2010, the consumer's investments continued to fluctuate in value, but never fully recovered from the losses she incurred. She demanded that her advisor switch her investments into safe investments, which he did.

In 2015, the consumer complained to the firm about losses she incurred due to unsuitable investments. Unsatisfied with the firm's response, she contacted OBSI.

The limitations issue was identified when the case was opened and the Investigator examined that issue first. They focused on what occurred in 2008 when the consumer noticed a large downturn, even though she said she believed her investments were guaranteed and low-risk.

The investigator concluded that in 2008 the investor ought reasonably to have known that her account was not invested in guaranteed and low risk investments. Therefore, the six-year period for the investor to complain to the firm began in 2008, when the consumer reasonably should have known of the problem and ended six years later, in 2014.

Because the case was out of mandate the Investigator did not investigate the issues of her instructions not being followed or the suitability of her investments and did not calculate her losses. They discussed our findings with the investor over the phone and through the investigation closing letter and closed the file.

_{Figure 2: OBSI six-year limitation period elapsed}

Example 3 - OBSI case opened, then closed during investigation

In 2004, a consumer purchased a three-year GIC with quarterly interest payments.

The consumer received all interest payments until the GIC matured at the end of year 2007. However, since the bank did not receive payout instructions for the principal, when the GIC matured it was invested in three-month T-Bills. The T-bills continuously rolled over, and the interest was reinvested, in accordance with the bank's policies.

In 2015, upon reviewing old files, the consumer discovered that he still had what he believed was a GIC with the bank and requested a redemption. The bank redeemed the T-Bill and sent the consumer his original principal plus interest he had earned at the T-Bill rate.

He complained to the bank asking for interest he would have earned on GICs, which was higher than the T-Bill rate. Unsatisfied with the bank's response, he contacted OBSI.

When the case was opened, we noted that the issue giving rise to the complaint had occurred 11 years before the complaint to the bank. When the investigator began work on the case, the limitations issue was the issue considered.

The investigator examined the evidence available and determined that the consumer should reasonably have known of the problem at the end of 2007, when he did not receive his principal back and stopped receiving quarterly GIC interest payments. Therefore, the limitation period began in 2007 and ended six year's later in 2013.

Since the consumer did not actually complain to the bank until 2015, the investigator found the case out of mandate and closed the case. They discussed our findings with the consumer, included our reasons in the investigation closing letter and closed the file. An investigation of the consumer's losses was not necessary. 

_{Figure 3: OBSI six-year limitation period elapsed}

Example 4 - OBSI case opened and investigation completed

An unsophisticated investor opened a new account and received an unsuitable recommendation in 2004.

In 2008, the investor thought there was a problem with the advice he received in 2004, even though he couldn't specifically or accurately describe it. He raised his concerns with his advisor and was told his investments were appropriate and he should remain invested. He trusted his advisor's advice.

In 2012, the investor sought an opinion from a different advisor and was told his investments were unsuitable.

The investor complained to the firm in 2016, and to OBSI later that year.

When we opened the case, we noted that the issue giving rise to the complaint occurred 12 years before the complaint to the firm. We also noted that the consumer indicated that they may have known of the problem eight years before complaining to the firm, but it was not clear that this was the case.

Once the investigator began work on the case, they examined the issue of what happened in 2008. The investigator determined that the consumer was unsophisticated and reasonably relied on their advisor's advice at that time.

The investigator then considered what happened in 2012. They determined that the consumer then knew or reasonably ought to have known about the problem at that time after they had consulted with an independent professional. Therefore, that was when the limitation period began. The investigator also determined that this was when the loss calculation period ended because, at that time, the consumer should have been able to mitigate their losses.

Therefore, the investigator determined that there was no limitation period problem in this case. The loss calculation period would run from 2006 to 2012. The investigator completed the investigation.

_{Figure 4: OBSI six-year limitation period & loss calculation period}

OBSI's approach to risk rating of securities and portfolios

Risk rating of securities is a key component of suitability analysis

As part of OBSI investigations, we often need to assess the suitability of a complainant's investments. To do so, we follow industry-accepted principles and best practices to compare an investor's needs and circumstances to the risks and characteristics of their investments and investment strategies. This document provides a high-level explanation of our approach to investment risk assessment in general and outlines the types of information we consider and analyze for several common asset types.

How we assess investment characteristics and risks

OBSI independently assesses the risk of individual securities as well as investment accounts and portfolios and how the risk profile changes over time. In a typical case, our analysis has two major phases:

1. Information gathering and independent analysis of the risk of each security in an account and portfolio
2. Assessment of the aggregate account or portfolio risk

We outline below in greater detail what is involved in each phase of our analysis.

Phase 1: Information gathering and risk analysis of each security

We start by collecting and considering a broad range of information about each security at the time(s) they were recommended to an investor and at regular time intervals as they continued to hold the security.

The determination of the regular time intervals will depend on the level of trading activity in the account or portfolio. Monthly or quarterly intervals are used when there is a lot of trading activity, while semi-annual or annual intervals are used when there is a limited amount of trading activity.

Equities

When assessing equity risk, we begin with the analysis of the issuer's financial statements to understand its current and past profitability, financial position and cash flows^[1]. We also examine the firm's market data to assess its financial ratios relative to its industry/peer groups (e.g., price to earnings, earnings per share, cash flow yield, debt to equity, profit margins, etc.), dividend payment history (if applicable), market capitalization and liquidity, and its trading history including beta and price volatility (standard deviation).

While quantitative financial criteria are of primary importance in the risk ratings of securities, qualitative factors can also be important components of the overall risk assessment. To analyse these factors, we conduct an assessment of all other relevant sources of financial, industry and operational risk^[2], including the issuer's:  

• industry sector(s), product lines, competitive position and economic outlook
• business model (including whether it is a private or public company)
• lifecycle stage (i.e., start up, rapid growth, mature, decline)
• corporate governance
• regulatory filings such as offering documentation, annual reports, MD&A (particularly the stated risks in the MD&A section)
• significant news releases, corporate, market, social or economic events

During this phase, we will also consider the analysis of other industry professionals, including historical analyst reports (where appropriate), consensus ratings (if any), and any analysis conducted by the firm and/or advisor, particularly any analysis conducted at the time of investment recommendations. We may incorporate these factors or use assessment techniques presented by the firm and/or advisor where we find that such factors or assessment techniques were reasonable and appropriate in all of the circumstances of the case.

Based on this analysis, we will form a view of the risk rating for each equity at each relevant point in time.

Fixed income

When assessing the risk of fixed income securities, we focus our analysis on the issuer's credit risk. Credit risk is defined as the risk of loss resulting from an issuer failing to make full and timely payments of interest and/or principal and takes into account both default risk and loss severity in the event of a default^[3]. To determine an issuer's credit risk, OBSI considers several factors including:

• issuer credit rating(s)^[4] published by the major credit rating agencies, if available
• the issuer type (e.g., government, quasi-government organization such as a crown corporation, or a corporation)
• the industry sector and the nature of the issuer's business, if applicable
• key financial credit measures, such as profitability, leverage and interest coverage
• whether the debt is secured or unsecured. If secured, the nature of the security will be considered
• the debt seniority or ranking in relation to the company's other debt obligations
• the term to maturity
• the yield and how it relates to benchmark yields (referred to as spread risk)
• the issuer's interest payment history
• the market for the issue and its liquidity
• reasonable analysis from other industry professionals, including the firm and/or advisor's contemporaneous analysis

Mutual funds

When assessing mutual funds, OBSI generally relies on the risk ratings published in the mutual fund company's simplified prospectus or fund facts document.

Phase 2: Assessing the risk profile of the account or portfolio and any changes over time

Next, using the risk ratings determined in the first phase of analysis, we will assess the risk profile of an account or portfolio and compare it against the investor's investment objectives, risk tolerance and personal and financial circumstances.

This assessment will include an analysis of additional risk factors, such as the account's diversification and asset allocation, as well as the risks of any accompanying strategy, such as active trading strategies or the use of margin or leverage. We will also consider how the risk of an account or investment portfolio changed over time as a result of trading activity, changes in a security issuer's circumstances and/or economic or market developments during the relevant investment period.

Sometimes a firm or advisor informs us they combined low-risk and high-risk securities to achieve a medium-risk portfolio profile. In these instances, we will ask for supporting documents and analysis (such as an asset allocation plan or a correlation analysis) to show that the combination of investments at various risk levels did in fact achieve a medium-risk profile for the overall portfolio. In practice, we have found that the risk characteristics of high-risk investments with respect to volatility and magnitude of total loss are usually much higher relative to the profile of medium and low-risk securities, and consequently such "risk offsetting" is difficult to achieve.

Questions?

Should you have more questions about our risk rating process, feel free to contact us.

In addition, you can find detailed information about the other components of our investment suitability and loss assessment process in our Consultation Paper: Suitability and Loss Assessment Process and in Our Approaches section of our website. 

OBSI's Approach to Calculating Investment Losses

People often complain to us that they lost money because their investments were not suitable for them and their advisor gave them bad advice. When we receive this type of complaint, here is what we do to see if that is true.

Finding out if the investments were suitable

We start with the person's investments and situation to find out if they got good advice. That means looking at:

• personal and financial circumstances
• what they know about investing
• how much money they were willing to lose or wanted to make
• how long before they needed the money
• what they wanted the investments to do for them

If we determine the investments were suitable for them, we will explain why. If they were not, we will work to find out if they were financially harmed as a result.

Determining financial harm

We follow three-steps to calculate financial harm:

1. We calculate how much money the person lost on the investments that were not suitable for them.
2. We calculate how much money they would have made if they had been suitably invested.
3. We then compare the two amounts. If the person would have made more money on investments that were suitable for them, then they incurred financial harm.

Our loss calculation process is complex and is done by financial experts. During our process, we consider:

• the activity in the account (e.g., when investments were bought and sold)
• any payments from the investments in the account (e.g., whether any interest or dividends got paid and re-invested)
• the transaction fees paid
• any other costs

Case example

Mr. Smith originally invested $100,000. Two years later, his account has $79,000 in it. During that time, he paid $1,000 in fees. He also lost $20,000 on his investment. The $79,000 in his account equals his starting investment minus the fees he paid and minus the money he lost.

This does not necessarily mean that Mr. Smith had $20,000 of financial harm. To find out if there was financial harm, we need to compare his losses to what would have happened if he was invested suitably. To do that, we look at how suitable investments performed during that time.

Assume Mr. Smith's $100,000 was invested suitably. Those investments increased by $10,000. During that time, he still would have paid $1,000 in fees. But his account would have $109,000 at the end of the two years.

We then compare these two outcomes. In this case, Mr. Smith's financial harm would be $30,000. That is the difference between what his money is now worth and what his money would have been worth if he had been invested suitably. You can see this example in the table below.

It is important to remember that the wrong kind of investments don't always lose money and the right kind of investments don't always make money. Investments all have some risk. Investments can lose money even when they are suitable for the person.

Also, sometimes investments that are wrong for a person make more money than investments that are right for them. When that happens, even though the person got bad investing advice, they have not had any financial harm. 

Deciding how much compensation is fair

We may determine that a person's investments were not suitable for them and that they had financial harm because of it. If so, we look at whether the advisor should pay for all the financial harm or just some of it. This depends on whether the investor has any responsibility for their own financial harm. To decide that, we will look at things like:

• the relationship between the investor, the advisor and the firm (e.g. did the advisor make all the decisions or were decisions made together?)
• how much the investor understood about the investments
• the information that the investor had at the time
• whether the investor took reasonable steps to protect themselves when they found out there was a problem

Once we have a full picture, we decide how much compensation is fair. We will communicate this to the investor and the firm. We will then work with both to resolve the complaint in a way that is fair. 

Useful links

Our website contains a lot of information about our approach, our process, and how we can help consumers and small businesses. For more detailed information, please see our firm resources page. Here you can find additional information about our investment suitability and loss assessment process as well as our Consultation Paper: Suitability and Loss Assessment Process. 

OBSI's Approach to Non-Financial Loss

While recommendations to compensate "loss, damage or harm" are part of OBSI's mandate, we often get questions about our approach to what is commonly called non-financial loss, which doesn't involve monetary loss for a client.

These are the cases where we believe the loss or damage for the client goes beyond direct financial loss because of the distress or inconvenience involved. It may also involve loss of reputation, damage to credit ratings or loss of privacy.

While every file is unique, and we consider what is fair in all the circumstances, it's important for all parties to know that we look at cases and consider recommendations consistently.

What is a non-financial loss?

A non-financial loss does not have a direct monetary value. In OBSI's dispute resolution process, a common example is the distress or inconvenience caused by a firm's maladministration or error.

Does OBSI recommend compensation for non-financial loss?

For the most part, our recommendations for compensation are designed to put clients back where they should have been if there hadn't been an error or poor advice. However, occasionally we have a case where we believe the loss suffered goes beyond direct financial loss because of the distress and inconvenience, or other non-financial loss, involved. In those cases, we will recommend compensation to recognize that loss as well.

In some cases, we may also recommend compensation even when there is not a direct financial loss.

In addition to distress and inconvenience, are there other non-financial losses OBSI will look at?

OBSI will also look at loss of reputation, damage to credit ratings and loss of privacy. In some cases of privacy breaches we may recommend that the complaint is better handled by the appropriate privacy commission.

When does OBSI not recommend compensation for non-financial loss?

All clients experience some inconvenience when dealing with a dispute with their financial institution. OBSI will not recommend compensation for the distress or inconvenience that may be expected as a normal part of doing business or for the time and effort required to make a complaint, unless it exceeds what we believe to be reasonable under the circumstances.

We do not look at health issues, such as stress or other medical conditions, when assessing non-financial losses. Nor do we consider claims for pain and suffering.

Our recommendations to compensate for non-financial loss should not be viewed as punishments. Where warranted, that is the role of a regulator or court. Similarly, we do not levy fines or award punitive damages.

Non-financial loss does not include "indirect" financial losses. If, for example, a client takes time off work to resolve a complaint and loses income as a result, that may be considered in the calculation of financial loss depending on the circumstances.

How often, and how much, does OBSI recommend for non-financial loss?

We have been making recommendations for non-financial loss since our office was formed in 1996. Except in extreme cases, the recommended compensation ranges from $100 to $5,000, but in most cases is less than $1,000.

Clients who consider their non-financial losses to be significant, or who want damages in addition to reimbursement, may want to pursue their complaint through other avenues such as the courts.

Do recommendations for non-financial loss always mean a financial award?

No. OBSI may recommend that firms compensate clients in ways that are not monetary, such as a letter of apology, restoring a product or service, correcting a credit bureau record or explanatory letters to a client's creditors. 
What do we consider in determining the amount of recommended compensation? 
While there is no exact measuring stick for assessing fair compensation for non-financial loss, we will consider the following as we make our recommendations:

• Was the non-financial loss prolonged?
• Was the non-financial loss significant?
• Has the client been through a period of unnecessary financial hardship?
• Was the complaint process itself unnecessarily difficult or prolonged?
• Did the client contribute to their non-financial loss?

Related case studies

How OBSI may compensate for non-financial harm

Relationship-ended

OBSI's approach to when a firm ends its relationship with the client

Relationship-ended: what does it mean?

A firm may choose to end its business relationship with a client. This means that the client's account must be closed, and their money is either sent to them or to another financial institution. We refer to this as a relationship-ended situation.

When can a firm end its relationship with a client?

The client account or credit agreement outlines a firm's right to close the client's accounts. A firm can end its relationship with a client for many reasons. The most common reasons being:

• The client did not follow the terms of the credit or account agreement or was dishonest with the bank. For example, trying to avoid the bank's rules by making multiple small cash deposits instead of one larger one.
• The client engaged in inappropriate or threatening behaviour. For example, threatening the safety of a bank employee.
• The firm has concerns that the activity in the account may not be legal and cannot get information from the client to ensure the activity is permitted. For example, a firm may suspect that the client's account is being used for fraud, money laundering, tax evasion or ties to terrorism. If this is the case, the firm is required to end its relationship with the client under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The process of ending the firm-customer relationship

Although the firm may choose to close a client's account with or without notice, firms will generally:

• provide clients with written notice of their intention to end the business relationship.
• allow clients 30 days to close their accounts.

Firms will generally notify their client of their intentions to end their relationship. The firm may mail a written notice to the address they have on file.

If the firm suspects illegal activity and there is a risk that the activity could continue, the firm can freeze or close the account without notice.

Firms have the choice to give a client more time to close their accounts if the client will have difficulty making other arrangements within the time allowed.

In some circumstances, firms do not have to give clients reasons for choosing to end the relationship.

Problems that commonly arise with relationship-ended cases

Some common misunderstandings and problems that arise when firms end their relationships with clients include:

• clients are offended and want reasons for the firm's decision.
• clients have not read the notices sent to them in time to make appropriate arrangements.
• registered accounts are closed, leading to tax consequences if appropriate arrangements are not or cannot be made in time.

Our approach

Regarding the firm's actions, we consider:

• The terms of the account agreement.
• Whether the firm followed the law and its policies and procedures to close the account. For example, the firm does not have to prove illegal or fraudulent activity, but it must show that there was a reasonable basis to suspect such activity.
• Whether the firm's process was fair and free of bias.
• Whether the firm provided reasonable notice in the circumstances of the case. For example:
  • 30 days might be reasonable for a client to open a new bank account but may not be enough time to apply for a new revolving business credit line.

We will not second guess a firm's risk decision or commercial judgement (i.e. its business decisions). This includes a firm's decision to end its business relationship with a client.

We will ask the firm for details about why they ended the relationship with the client. However, we cannot share the reasons for the firm's decision with the client unless the firm allows us to.

Regarding the client's actions, we consider:

• Did the client fail to follow the terms of their account or credit agreement?
• Did the client give the firm a reasonable explanation for any activities in question?
• If there were issues that would cause the client to need additional time to close the account, did the client promptly notify the firm of those reasons and request additional time?

Our recommendations

If we find the firm did not follow their process or acted with bias or unreasonably, we may make a recommendation for compensation for non-financial loss or another remedy. If a firm followed their processes properly and acted fairly we would not recommend compensation. 

Cheques

Common problems we see in cases involving cheques

Cheques are not as simple as many Canadians think! At OBSI, we find that people often misunderstand the rules relating to cheques and this can cause them to lose money, fall victim to frauds, and have problems with their financial institution.  

What is a cheque?

A cheque is a written promise from one person to pay another. A cheque is a document that instructs the bank to pay a certain amount of money from one account to another. 

A cheque is NOT a guarantee you will receive the promised money. For example, the cheque must be properly written and the cheque-writer must have sufficient money in their account to pay the amount promised.

How a cheque is processed

A cheque must be processed or "cleared" by the bank before the money promised by the cheque belongs to you. Even if the money from the cheque has been deposited into your account you may not be entitled to keep it if the cheque doesn't clear.

A bank will clear a cheque if it is properly written, there is enough money in the cheque-writer's account, and if there are no other problems with the cheque (like fraud, duplication, or a stop payment). A depositor cannot keep money promised by a cheque if the cheque does not clear. For example, if you deposit a cheque into your account and it is fraudulent, or there is not enough money in the account of the person who wrote the cheque to you, the bank will reverse the deposit and take the money back. 

Many people think that cheques can be cleared quickly - like in 3 or 5 days. Banks have much longer than that - up to 90 days or even longer - to reverse a cheque deposit if it turns out that the cheque-writer does not have the money they promised or that there are other problems with the cheque.  

Common problems that can arise with cheques

We see some common misunderstandings and problems related to the use of cheques. These include: 

Credit card chargebacks

OBSI's approach to credit card chargeback cases

What is a chargeback?

A chargeback is the reversal of a credit card charge. There are several reasons why consumers might request a chargeback, including:

• they did not authorize the charge
• the merchant did not deliver the product or service, or
• the product or service received was not as described or what they expected

The chargeback process

Most credit card agreements require consumers to first try to resolve issues directly with the merchant. If that doesn't work, consumers can request a chargeback through their credit card issuer, which is often a bank. The bank will determine if the consumer's chargeback request has merit. The bank then submits the chargeback request to the credit card network (for example, VISA or Mastercard) and follows the credit card network's chargeback process. The credit card network will in turn involve the merchant's bank in the process.

Our approach

The chargeback request process is run by the credit card networks. They ultimately decide the outcome of chargeback requests. The credit card networks are not OBSI participating firms. Only the banks, which are the credit card issuers, are OBSI participating firms. Our focus in chargeback complaints is how the bank and the consumer conducted themselves during the chargeback process.

Regarding the credit card issuer's actions, we consider:

• Did the bank provide the consumer with clear guidance about the chargeback process?
  • This includes any applicable deadlines and any information the consumer needed to provide to support their request
• Did the bank take reasonable steps to submit and process the consumer's chargeback request in accordance with the credit card network's chargeback rules?
  • This will include determining the eligibility of chargeback request and reviewing the required information to support the request, appropriately rebutting the merchant's response and, if necessary, requesting the credit card network settle the matter
• Did the bank follow its internal policies and procedures for submitting and processing chargebacks?
• Did the bank follow any applicable consumer protection legislation?

Regarding the consumer's actions, we consider:

• Did the consumer first try to resolve the issue with the merchant?
  • Typically, credit card agreements require consumers to first try to resolve their dispute directly with the merchant
• Did the consumer report the disputed transaction to the bank within the required timeframe?
  • Consumers need to report any disputed transactions to their bank within a specific period
• Did the consumer provide the bank with appropriate evidence and information regarding the disputed transaction in a timely manner?
  • For example, proof of purchase or the service agreement for the transaction disputed
• Did the consumer follow other reasonable requests/instructions from the bank?
  • For example, did the consumer provide additional information to support the chargeback request?

Our recommendations

After considering the actions of the consumer and the bank, we determine if it would be fair in the circumstances to recommend the bank compensate the consumer. We may not recommend any compensation. We may recommend the bank fully compensate the consumer for their loss, or we may recommend that the parties share responsibility for any loss.

Related case studies

Chargebacks