CIBC customers dinged when bank adds $5 fee to e-gift cards, calling them a 'cash advance'
CBC
Catharine Murphy likes to send her friends and family e-gift cards — for special occasions, to mark a holiday, just say thank you, or to make up for missing a milestone.
"I'm the person who will always wish you a belated birthday," she said with a laugh, during an interview at her home in Oakville, Ont.
But last November as she reviewed her CIBC Visa credit card statement, Murphy noticed an additional $5 charge below a $10 Tim Hortons gift card she'd purchased for a son who is away at school.
She also saw another $5 charge for a second $10 Tim Hortons gift card Murphy had purchased for her daughter.
Curious, she dug out her October Visa statement and discovered the bank had also dinged her $5 when she bought a $25 Starbucks e-gift card for a friend that month. A gift card she purchased in August did not have the extra fee.
Murphy called CIBC to inquire about the extra charges and after a lengthy conversation with a customer service rep learned they were "cash advance" fees, charged every time anyone purchased a gift card that is sold by a company called CashStar.
That third party company sells gift cards online or via an app for more than 300 companies — many of them popular brands such as Tim Hortons, Starbucks, Best Buy, Home Depot, Lululemon and Sephora.
Murphy said it was "infuriating" to see a $5 cash advance fee on the purchase of a gift card — a fee that was accruing interest from the day of purchase at a rate of 22.99 per cent — not the usual 19.99 per cent charged on regular purchases only if the monthly credit card balance isn't paid off.
On top of that, she says the CIBC rep couldn't explain who was responsible for the charge — the bank itself, or CashStar.
Despite having her call escalated to a senior manager and calling back a few days later, Murphy says she couldn't get any clarity about who was responsible for the charges.
That lack of clarity is what consumers find most frustrating, especially when the big banks are making record profits, says a professor at the University of British Columbia's Sauder School of Business.
"They should be upfront with what it is consumers are paying," said Murali Chandrashekaran, who specializes in marketing and behavioural science. "It's the transparency that's more important than the actual pricing itself."
When Go Public asked CashStar about the cash advance fee, a spokesperson said in a written statement that the company does not charge any additional fees, and that any cash advance fee would be "charged by the credit card issuer."
CIBC declined an interview request, but in a statement a spokesperson said, "some gift cards purchased through third-party sellers are treated as cash-like transactions which can result in a cash advance fee."
