Canadian banks caught using predatory sales tactics to sell insurance product

Published: November 7, 2018



An investigation into the selling practices of Canadian banks has resulted in damning evidence surrounding financial institutions’ selling tactics. CBC News reports banks are using predatory sales methods to sell an insurance product to customers.

The product in question is called credit card balance insurance (sometimes balance protection insurance). As the name suggests, it is a coverage platform that supposedly provides funds for credit card payments if the client gets sick or loses their job.

Supposedly is an important word in this case as the insurance product is fraught with danger. While seemingly a good deal on paper, allowing the customer to feel secure with credit card payments, balance protection insurance is loaded with high fees.

Experts says credit card balance insurance leverages a percentage of the cardholder’s outstanding balance and comes with lots of exclusions. Even then, some customers may take the plunge for peace of mind. The claims process for balance insurance is also notoriously tricky, with most customer claims failing.

CBC News conducted a hidden camera investigation into credit card balance insurance, with startling results. Banks offering this type of coverage are either actively pushing clients to purchase protection or making information regarding the product confusing or misleading.

Four banks were targeted in the investigation, all of them in Toronto: Bank of Montreal, RBC, Scotiabank, and CIBC. The aim was to see how each bank marketed credit card balance insurance. While RBC did not offer the product to the investigative team, the other three highlighted issues with how they sell the coverage.

Caught in the Act

At CIBC, an employee had automatically added the product to a credit card application before the investigators signed for the card. “You can delete it any time you want,” the CIBC employee claimed. “It’s easy. You just have to pick up the phone and call. That’s it.”

It was a similar story at the Bank of Montreal. The employee trying to sell the protection knew little about the product and needed a brochure to read from for information.

Scotiabank was arguably the worst offender as the employee tried to sell protection using incorrect information about what the insurance is. The employee told investigators the bank paid off the entire credit card balance if the client lost their job. This is untrue as the insurance only pays 10% of an outstanding balance to a maximum of $5,000. It is unclear if this employee was trying to trick the investigator or simply did not know the product well enough.