Financial Consumer Agency of Canada

Financial Consumer Agency of Canada

March 11, 2008 16:00 ET

FCAC Releases Findings of its Research on Consumer Knowledge Related to Debit Cards

OTTAWA, ONTARIO--(Marketwire - March 11, 2008) - The Financial Consumer Agency of Canada (FCAC) today released the results of survey and focus group research on consumers' knowledge and comfort around debit card use. While nearly all consumers report feeling well-informed about debit cards and well-protected while using their card, findings reveal they are not clear on their liability when it comes to losses resulting from unauthorized transactions made with their card.

Findings of the research indicate that Canadians use their debit cards frequently and for a wide range of transactions. They are generally confident about the safety and security of debit card transactions, and nearly all consumers are satisfied with the measures that financial institutions take to minimize the risks associated with the use of debit cards.

"The majority of Canadians seem to know what constitutes a proper personal identification number (PIN) and what combinations to avoid," said FCAC Commissioner Ursula Menke. "They also know that it is not safe to keep a written copy of their PIN near their card. However, our research indicates that more than half of debit card holders have little or no awareness about what could expose them to liability for losses arising from a fraudulent use of their debit card or their PIN."

"For example, many consumers are not aware that choosing an easily identifiable PIN - like their birth date, address or telephone number - or divulging their PIN to anyone, including friends and family, could limit their recourse for reimbursement if unauthorized transactions were to occur on their card," added Commissioner Menke. "Also, most consumers do not know that they could be held liable for money removed from a line of credit or overdraft linked to their account."

Most respondents expressed satisfaction with the information provided by their financial institution about what to do if their card was lost or stolen. However, focus group respondents tended to describe the documents they received as dense and legalistic. Along with their cardholder agreement, they indicated they would like to receive a short and simple summary of the key information it contains.

Participants recognized their lack of knowledge about liability, stating that they would like more information from their financial institution, about debit card fraud and how they can prevent it. In addition, respondents said they want to know more about their responsibility for the security of their debit card, and about their liability for losses resulting from unauthorized use of their card.

"Our focus group research shows that Canadians find the documents they receive from their financial institutions hard to understand," said Commissioner Menke. "FCAC will continue to work with the industry to promote the use of plain language in the documentation for consumers. I invite consumers to read our tip sheet called Protecting Your Debit Card and Personal Identification Number (PIN), available on-line or in print. It explains how consumers are protected when they use their debit card."

Ten percent of survey respondents reported that they had contacted their financial institution about a problem with their debit card over the past year. Over the same period, four percent stated that they had experienced an unauthorized transaction which allegedly involved fraud.

Findings indicates that financial institutions respond to problems reported by consumers within the required time, as well as a generally high level of card holder satisfaction with the way problems are addressed, including problems related to unauthorized transactions.

This national research, conducted in 2007, is part of FCAC's continuing efforts to monitor the knowledge and attitudes of Canadian financial consumers. Debit cards are an important financial product and service for which FCAC provides oversight through the monitoring of the Canadian Code of Practice for Consumer Debit Card Services, a voluntary code of conduct that outlines industry practices and consumer and industry responsibilities with regard to the use of debit cards and personal identifications numbers (PINs).

To view or download a copy of the report's executive summary, visit FCAC's Web site at Consumers can learn more about their rights and responsibilities regarding the use of debit cards by visiting the Agency's Web site or by calling its Consumers Contact Centre at 1-866-461-3222.

FCAC is an agency of the federal government that ensures compliance with the consumer protection laws and monitors compliance with the codes of conduct and public commitments that apply to banks and federally incorporated trust, loan and insurance companies. FCAC also provides consumers with accurate, objective information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with federally regulated financial institutions.

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