Money Mart defends giving half the face value in cash for gift cards

UPDATE: Money Mart has suspended its program in the wake of harsh criticism

TORONTO – Money Mart defended its practice of exchanging cash for gift cards at half of their face value Friday as a “convenient” service for its customers.

The payday loan company hired a New York public relations firm to respond after Ontario’s New Democrats called Money Mart a Grinch for launching the cash-for-gift-cards scheme during the pre-Christmas period.

“Money Mart believes it is offering customers a convenient, value-added product though this service,” said the statement, which was issued after midnight.

Tweet This Click to share quote on Twitter: "Money Mart believes it is offering customers a convenient, value-added product though this service," said the statement, which was issued after midnight.

The payday loan company, which has branches across the country, said the cash-for-gift-cards service is available only at some of its outlets.

But the company voluntarily ceased the practice Friday after criticism:

NDP consumer critic Jagmeet Singh said the statement claiming the gift card exchange is somehow a value-added service shows “how horribly misguided” Money Mart really is.

“You’re taking 50 per cent of the value,” said Singh. “It’s not adding any value. It’s taking away value.”

Many charities give clients gift cards during the Christmas season, and Money Mart is “greedily” grabbing half of the money meant for people living on very low incomes, added Singh.

“It’s actually preying on very vulnerable people,” he said. “It may not be actually criminal, but it’s morally criminal.”

Tweet This Click to share quote on Twitter: "It's actually preying on very vulnerable people," he said. "It may not be actually criminal, but it's morally criminal."

Ontario’s Progressive Conservatives accused Money Mart of “highway robbery,” and like the NDP, demanded the Liberal government immediately stop the practice.

“It’s a sad indictment of society that we’re allowing it to happen, so the government needs to shut it down right away,” said interim PC Leader Jim Wilson.

Consumer Minister David Orazietti said he’d look at regulating cash-for-gift-card plans, but called it a tough issue because people trading something they own for less than face value may not be any of the government’s business.

Money Mart said Friday that it would be up to the American public relations firm ICR to respond to questions about how it makes money off the gift cards or if it sells them back to the original retailers.

“I don’t know what their economic model is,” said Singh. “I just know that whatever it is, it’s wrong.”

Tweet This Click to share quote on Twitter: "I don't know what their economic model is," said Singh. "I just know that whatever it is, it's wrong."

The statement issued by ICR early Friday morning did not directly address Thursday’s accusations from Ontario politicians that Money Mart was preying on vulnerable members of society.

“Money Mart, like other retailers, is offering a service under which it purchases merchant gift cards from customers who don’t want to purchase the products offered by the gift card merchant,” said the statement.

“The service… includes gift cards from a wide variety of merchants, including hardware and sporting goods stores, fast food and apparel outlets.”