For David Duprey, owner of the Narrow Group, margins are slim. So when $14,000 in tips went missing from his digital wallet at the end of January, it didn’t go unnoticed.
Duprey paid his staff their tips out of his own pocket, putting a serious dent in his operating budget.
“In smaller businesses and little guys, it’s huge, and it’s just such a drag,” he said.
“This was supposed to be held in trust. What does a trust even mean if there’s no money?”
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Thousands of hospitality businesses across Canada use the app Everyday Payments to pay tips out to their employees.
It’s still not known just how much money disappeared from the app, but financial documents suggest the number is approaching $19 million.
Those affected say they’re resigned to the loss.
“Not a lot of hope on my end,” Duprey said.
“I’m not an optimist, I’m a realist.”
The reason the money went missing, where it’s gone, whether it’ll be returned, and whose fault it is are all questions without definitive answers right now.
The trail starts with a payment app, AnyDay, originally created by a Toronto company called XTM. XTM then partnered with Edmonton’s Everyday People Financial Corporation to form a joint subsidiary to operate the app, which then became known as Everyday Payments. Each company claims the other was responsible for managing the money.
In the time since it went missing, the Bank of Canada (BoC) has pointing at XTM, ordering it to temporarily halt operations.
“XTM failed to safeguard end-user funds in its possession, and caused a significant shortfall in end-user funds to accrue,” it said.
Then on Feb. 27, the BoC issued a temporary authorization for XTM Inc. to resume retail payment activities, limited to the operation of the Everyday Payments platform, and with a number of conditions.
Cyberfraud expert Ryan Duquette says there are a number of possibilities that could be behind the missing money.
“Missing funds don’t always mean fraud, but the investigation will take some time, especially when there’s two companies interconnected,” Duquette said.
“It could be operational mismanagement. We’ve seen that in the past with cryptocurrency platforms and whatnot. It could be gaps in their financial controls or their security controls, or in some cases, it could be potential misconduct or even fraud.”
Industry representatives in B.C. say local businesses are taking the matter to their banks, insurance companies, and local authorities.
“Going to the respective RCMP and/or police departments to make sure they’ve filed a claim,” said Ian Tostenson, president and CEO of the BC Restaurant and Foodservices Association.“That might be useful if, in fact, we get to a point where there is a class action suit.”
Duprey, for one, says he’s already been approached by lawyers about signing onto a class action. He doesn’t have any illusions about getting all of his money back, but he says someone needs to be held accountable.
“Somebody needs to go to jail here,” he said.
“It’s a lot of money.”