Prepaid Cards

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A "prepaid" card can be a card, cheque, certificate, etc. that allows a person to acquire goods or services in exchange for a payment made in advance:

  • A mobile telephone card
  • A bus pass
  • A prepaid credit card (yes, it exists!)
  • A gift certificate valid in a specific business (ex. a bookstore)
  • A card that can be exchanged for a particular item or service (ex. a massage).
  • A card that is valid at all businesses in a given place (ex. a shopping centre).
Note:  Cards you receive free of charge when you buy something or in exchange for points (or any other means of recompense) are not covered by the rules described in this article.

Refundable Balance

If you so request, a merchant must refund in cash any amount less than $5 remaining on a prepaid card, except for a mobile telephone card or a prepaid credit card.

Balance Protected When you Replace a Card

Your prepaid card can provide for a specific date when you must have it replaced by the merchant. For example, a company might want all its outstanding cards to have its new design.

The amount remaining on the old card must remain on the card.

And there are other rules too:

  • Your card must be replaced free of charge.
  • The replacement date must be written on the card.
  • Right after the date, the card must say that you cannot lose the remaining balance.

Expiry Dates on Prepaid Cards

  • Since June 30, 2010, prepaid cards cannot have expiry dates, except for cell phone cards and cards giving access to unlimited use of a service (e.g., a bus pass).

    Note that you have seven days after the expiry date of your cell phone card to "recharge" it in order to preserve any balance on it. Contact your cell phone company to learn more.

  • For cards that can be exchanged for specific goods or services, the merchant is allowed to charge the difference between the price of the goods or services when they are claimed and what they cost when the card was purchased.

    In these cases, the merchant must indicate this information on the card:

    • the price of the goods or services when the card was purchased
    • the date as of which the merchant can charge the difference
    • the fact that the merchant can charge the difference

Examples:

Wording of Gift Certificate

Validity

"Good for one pedicure ($35 value). Expires on December 31, 2010." This expiry date is not valid. You can get a free pedicure.
"Good for one pedicure. After December  31, 2010, we may claim any increase in the price of this service." This statement is not valid because the value of the pedicure
when the gift certificate was purchased is not mentioned. You can get a free pedicure.
"Good for one pedicure ($35 value). After
 December 31, 2010, we may claim any increase in the price of this service."
This statement is valid. If the price of pedicures has increased since the gift certificate was purchased, the merchant can charge you the difference.

Charges for Use, Activation or Non-Use

As a general rule, merchants who sell prepaid cards cannot charge a fee for you to get, activate or use them.

Exceptions:

  • prepaid credit cards
  • fees to personalize a card (design, name, etc.)
  • fees to replace a lost, damaged or stolen prepaid card

Also, a card that gives access to several different businesses - a card for a shopping centre, for example - can provide for these fees:

  • activation fees of up to $3.50, which must be mentioned on the card
  • non-use fees of up to $2.50 per month, as long as certain information is mentioned on the front and back of the card. Also, the merchant must wait for 15 months after the card is purchased to be able to charge you non-use fees. Also, if before the end of the 14th month you ask the merchant to wait until the 18th month to collect these fees, the merchant has to wait until the 18th month.

Example

Front

A statement drawing the consumer's attention to the back in letters of at least 10-point print.

Back

  • amount of the non-use fee
  • a statement that the merchant cannot charge the fee before the 15th month
  • a statement that the merchant cannot charge a fee before the 18th month if the consumer so requests before the end of the 14th month
  • name of the merchant who should be contacted to make this request
 

Important !
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.