OTTAWA - NDP MP Libby Davies (Vancouver East) today introduced a private member’s bill to protect consumers from lawsuits when cheque cashing businesses cash cancelled cheques. Under current laws, businesses such as Money Mart can successfully sue the issuer of a cheque cashed by a third party, even when a stop payment order has been issued.
“The existing law allows cheque cashing companies to benefit from fraud. It’s utterly absurd and unfair that the law victimizes consumers trying to protect themselves,” said Davies.
The problem came to Davies’ attention when a Money Mart outlet in Vancouver allowed a fraudulent building contractor to cash a stopped cheque, and then threatened to sue the person who had written the cheque, rather than the fraudulent contractor. The victim asked Ms. Davies to take the issue to Parliament.
“The bill I’m introducing today, Bill C-564, prevents the cashing of cheques by a cheque cashing business when a cheque has been cancelled by the person who wrote it,” said Davies. “That puts the onus on these businesses to make sure cheques they are cashing have not had a stop payment put on them.”
While the exact scale of the problem addressed by Davies' bill is unknown, legal databases show dozens of similar cases. The issue springs from a flaw in the Bills of Exchange Act, a piece of legislation governing financial transactions that dates back to the 1890s.
“This bill provides a much needed amendment to an outdated and flawed piece of legislation. I hope that members from all parties will support it so that we can put a stop to this injustice,” said Davies.