Bal Brach
Sun
OTTAWA — A private member’s bill introduced in the House of Commons Monday would require that cheque-cashing services protect the rights of consumers in the same way as banks and other mainstream financial institutions.
The goal of the bill, put forward by Vancouver East New Democrat MP Libby Davies, would be to prevent victims of fraud from being victimized a second time when they are unable to stop a payment to a con artist.
Under current law, if a person puts a stop-payment order on a cheque because of fears the cheque may have been written to a fraudster, and the fraudster cashes it at a cheque-cashing service, the service is entitled to sue the person who wrote the cheque, rather than the fraudster who cashed it.
That’s what happened to 71-year-old Stan Green, who was looking for a contractor to do some work on his Vancouver home. After he struck a deal with the man to do the work for $1,000 in February, he gave the man a postdated cheque for March 1.
When Green figured out before that date that the contractor was a con artist, he put a stop to the payment.
But it was too late and the fraudster had already cashed the cheque at a cheque cashing outlet. The service had threatened to sue Green to recover the funds, but has since reconsidered.
“It’s utterly absurd and unfair that the law victimizes consumers trying to protect themselves,” said Davies.
“The bill I’m introducing today prevents the cashing of cheques by a cheque cashing business when a cheque has been cancelled by the person who wrote it,” she added.
“That puts the onus on these businesses to make sure cheques they are cashing have not had a stop payment put on them.”
Under Davies’ proposal, the rights of consumers would be protected at cheque-cashing services in the same way as they are if a stopped cheque is taken to a bank or credit union to be cashed. In cases where such cheques get past the institution’s safeguards, the institutions themselves are obliged to accept responsibility and take the loss.
“Cheque-cashing services will have to conduct . . . due diligence in determining whether to cash a cheque,” said a report on the issue that was commissioned by Davies from the Library of Parliament.
© The Vancouver Sun 2008
