Undisclosed Fees Charged by Banks and Desjardins for Foreign Exchange Conversions

Case name:

Undisclosed fees charged by Banks and Desjardins for foreign exchange conversion services

Quebec Superior Court file #:

500-06-000020-269

What this case is about:

The banks and Desjardins (the “Defendants” listed below) offer their customers foreign currency conversion services as part of their respective financial services agreements. These agreements fail to disclose the fees added on by the banks to the interbank exchange – or other reference rate – which is, in fact, a cost they charge their customers to perform the currency exchange. These transactions occur, for instance, when customers exchange foreign currency at the branch, online, when depositing a cheque or receiving a wire.

Desjardins, in addition, advertises that it does not charge fees for foreign exchange services when customers make a purchase or a cash withdrawal in foreign currency from abroad, but do, in fact, charge fees ranging from approximately 1.70% to 2.35% of the converted amount.

The Defendants know – with precision – the amount they charge for currency their conversion services. The exchange rate offered to customers is not arbitrary; it is systematically constructed by adding a predetermined spread to a reference or interbank rate, a spread that is calculated, monitored, and recorded internally. In other words, the Defendants are at all times aware of the exact cost of the conversion service they provide. However, that cost is never disclosed to the customers as such. Instead, it is embedded within an “all-in” exchange rate that conceals the existence and magnitude of the charge. This creates a fundamental asymmetry: while the bank knows precisely what it is charging, the customer cannot, at the time of the transaction, identify or quantify the cost of the service. Such a practice is incompatible with the requirements of section 12 of Quebec’s Consumer Protection Act, which stipulates that the cost of a service be disclosed precisely and in a manner that allows the consumer to know what they are being charged. It is also contrary to the Civil Code of Quebec.

The Defendants are:

Toronto-Dominion Bank
Fédération des caisses Desjardins du Québec
Royal Bank of Canada
Bank of Montreal
Canadian Imperial Bank of Commerce
Bank of Nova Scotia
National Bank of Canada
Laurentian Bank of Canada
Shakepay Inc.

Proposed Class and Subclass:

Primary Group:

All physical persons who entered into an agreement for banking services with any of the Defendants, for purposes other than business, and who, for a foreign exchange transaction, paid an additional amount – on top of the interbank exchange rate or other reference rate – that was not precisely indicated in the agreement, and who currently reside in the province of Quebec or who resided in the province of Quebec at the time they entered into their agreement (or anywhere in Canada for Desjardins, Bank of Montreal, National Bank of Canada, Laurentian Bank and Shakepay).

Secondary Group:

All persons not included in the Primary Group who entered into an agreement with any of the Defendants for banking services and who, for a foreign exchange transaction, paid an additional amount – on top of the interbank exchange rate or other reference rate – that was not precisely indicated in the agreement, and who currently reside in the province of Quebec or who resided in the province of Quebec at the time they entered into their agreement (or anywhere in Canada for Desjardins, Bank of Montreal, National Bank of Canada, Laurentian Bank and Shakepay).

Remedies sought:

The purpose of this class action is to obtain:

a) restitution (reimbursements) in the aggregate amounts per Defendant to be determined based on the total foreign exchange fees, mark-ups or commissions they collected and that was not indicated in their respective agreements; and
b) punitive damages pursuant to s. 272 CPA for the Primary Group members, in amounts to be determined.