August 21, 2003 by Canadian Underwriter
The Friday following the “Blackout of 2003” on August 13, credit-card sales dropped an estimated $100 million in Canada, but the decline is likely a temporary one. This is according to credit card processor Moneris Solutions Corp.
Comparing last Friday’s credit card transactions with that of the Friday before, total credit card spending was down 29%, with most retail categories reporting declines of about 40%. Gas and convenience stores, however, actually saw increased sales to the tune of 30%. The services sector saw credit card spending drop by about 41% that day.
However, Moneris president and CEO Jim Baumgartner says the drop is likely due to consumers not spending on that day, but not a long-term consumer trend. “What’s important to realize is that we shouldn’t think of this as a $100-million loss to the Ontario economy,” he says. “More likely, the vast majority of the decrease is deferred spending by consumers; purchases that were meant to be made last Friday have simply been postponed to another day.”
In other “Blackout of 2003” news, one U.S. law firm has already filed a class action lawsuit against Cleveland, Ohio-based FirstEnergy Corp. charging the company with “recklessly causing the power outage”. The complaint says FirstEnergy failed to have an alarm to alert controllers of the power failure and failed to have a system that would separate the local power system from the rest of the power grid. The suit seeks compensation for losses and punitive damages, “to ensure that FirstEnergy never again engages in similar misconduct”.
While some sources have speculated that Cleveland was the source of the blackout, no conclusive study has yet been conducted to determine the cause.
The law firm involved, New York-based Cauley Geller Bowman & Rudman, LLP, already has a pending class action suit against FirstEnergy on behalf of shareholders who say the company mis-stated its financials.