Undisclosed fees charged by financial institutions and other perceived “deep pocket” organizations have attracted class actions across Canada and the U.S. throughout the past few years. Continuing this trend, the British Columbia Court of Appeal recently released a decision in Finkel v. Coast Capital Savings Credit Union upholding the certification of another class action for undisclosed fees.
The Rise of Undisclosed Fees Class Actions: The last few years have seen class action plaintiffs targeting large organizations for alleged undisclosed or “hidden” fees above and beyond the advertised fees. Generally speaking, these actions allege that the defendant companies failed to disclose or were in some other way not upfront about the additional fees, such that customers ended up paying more than what they were led to believe they would pay.
Some of these class actions have enjoyed significant media attention, such as the “Ticketmaster” class action in New York alleging hidden surcharge fees to process the purchases; the hotel and resort fees class actions in both the U.S. and Canada alleging that hotels failed to clearly notify consumers of resort or other marketing fees before including them on a final bill; the Uber class actions, on both sides of the border, alleging that the company failed to clearly disclose the “Safe Rides Fee” of around $2 per ride (the U.S. action was settled this summer for over USD$32 million); the Comcast class action in California over certain broadcast fees; the Airbnb proposed class actions in multiple Canadian courts over “service fees”; and the list goes on.
Although they may not have grabbed as many headlines as some of these hidden fee actions, the financial industry has seen its share of class actions brought on behalf of costumers alleging a variety of undisclosed fees such as foreign exchange fees, currency conversion fees, and title insurance fees.
The Finkel Case: The Finkel action concerns undisclosed foreign currency fees. The plaintiff alleges that Coast Capital (a credit union that provides banking, lending and investment services to its members) imposed undisclosed surcharges on members who withdrew foreign currency from their personal accounts through automated teller machines (ATMs) outside of Canada.
The plaintiff pleaded three causes of action. First, the claim alleges breach of contract: that the additional surcharges constituted a breach of Coast Capital’s contractual obligations as set out in the standard form Account Agreement that entitled Coast Capital to charge its members service fees for various transactions. The plaintiff also alleges that Coast Capital engaged in a deceptive act or practice, contrary to the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 (“BPCPA”). The British Columbia Supreme Court certified these claims. The plaintiff also pleaded a claim for misleading advertising contrary to the Competition Act, but that proposed cause of action was not certified and was not at issue on appeal.
The Test for Certification: The test for certification in British Columbia is set out in section 4(1) of the Class Proceedings Act. The test states that a court must certify a proceeding as a class proceeding if all of the following requirements are met:
(a) the pleadings disclose a cause of action; (b) there is an identifiable class of 2 or more persons; (c) the claims of the class members raise common issues, whether or not those common issues predominate over issues affecting only individual members; (d) a class proceeding would be the preferable procedure for the fair and efficient resolution of the common issues; (e) there is a representative plaintiff who
(i) would fairly and adequately represent the interests of the class, (ii) has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and (iii) does not have, on the common issues, an interest that is in conflict with the interests of other class members.
The threshold for certification is generally considered to be low: the merits of the claim are not to be considered on certification and competing evidence is not weighed. A pleading will be found to disclose a cause of action unless it is plain and obvious that the action cannot succeed. If the pleading discloses a cause of action, the plaintiff must demonstrate that there is “some basis in fact” for each remaining requirement.
The Appeal: On appeal, Coast Capital argued that the motion judge erred in granting certification because the pleadings do not disclose a cause of action and the evidence does not support a finding that the claims raise common issues or that a class proceeding is the preferable procedure.
The Court of Appeal rejected Coast Capital’s arguments. The pleadings adequately disclosed a cause of action and the Court of Appeal emphasized the importance of giving deference to a certification judge when reviewing evidence for the common issues and preferable procedure. The Court of Appeal also rejected Coast Capital’s submission that the motion judge erred in certifying the claims without consideration of the pleaded defences, emphasizing that any such submissions pertaining to the merits of a claim are not appropriately dealt with on certification.