An investigation into a controversial insurance product has found that banks are using predatory sales tactics.
CBC News has been investigating issues surrounding a product called credit card balance insurance (or balance protection insurance) – a type of insurance that supposedly helps with credit card payments in the event a cardholder loses their job or gets sick.
While the product sounds promising on paper, many experts warn that balance insurance comes with high fees – usually a percentage of a cardholder’s outstanding balance. The product also has a lot of exclusions, which makes it difficult for consumers to make a claim.
To get to the bottom of the balance insurance controversy, CBC News conducted a hidden camera investigation on the matter – discovering that the banks which sold the product either unscrupulously pushed consumers to buy the coverage or had confusing/inaccurate information regarding the product.
The news outlet visited four bank branches in Toronto – Bank of Montreal, CIBC, RBC and Scotiabank – to investigate how bank employees marketed balance insurance. Of the four, RBC did not offer the product to the undercover reporters at the time of the investigation.
The other three, however, revealed how problematic the sales of balance insurance are.
When undercover investigators signed up to take out a credit card with CIBC, an employee had already added the insurance to the card even before there was a chance to decline the balance protection.
“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.”
The employee was later told to delete it, and she later acknowledged that she should have asked first before adding the insurance.
At BMO, the employee in charge of selling the insurance appeared to have no knowledge of the coverage – going so far as to grab a brochure to read aloud a product description.
Investigators found that a Scotiabank employee was selling the coverage using inaccurate information about what the product covered. The employee claimed that the bank would pay off an entire credit card balance if someone lost their job. However, the bank’s insurance only pays 10% of an outstanding balance, up to a limit of $5,000.
An employee from a major bank – who asked CBC News to remain anonymous – admitted that they are being pressured to sell the insurance to meet targets using any means necessary.
“We are misleading the client,” the employee said, who also admitted that he and his colleagues would sometimes leave out the fact that the insurance is entirely optional.
