Looking for Cover: A Public Choice Critique of the Canadian Debit Card Code

Abstract

This paper compares and contrasts American and Canadian efforts to regulate debit cards. The paper begins by outlining significant differences between the two approaches arguing that Canadians do not enjoy the same level of protection as do their American counterparts with respect to its provisions governing unauthorized transactions, dispute resolution and its enforcement mechanisms.

The question is then asked as to why this is the case and the paper examines the two legal regimes through an institutions affirming public choice lens. The paper suggests that the more concentrated nature of the financial services industry in addition to its desire to forestall more onerous future legislation explains why Debit Cards in Canada are governed by a more lax consumer protection regime than is the case in the United States.

With respect to the methodology used to reach this conclusion, the author postulates that public choice can only be effective as a public policy tool if it is used in a positive prescriptive manner that is designed to provide an institutional alternative. The paper concludes with some suggestions for reform designed to make the legal regime in Canada more responsive to consumer concerns.