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IDENTITY THEFT GROWING 'EXPLOSIVELY'

Posted on November 7, 2003

      Identity theft is growing "explosively" in Canada and more decisive action is needed to stymie the fraudsters and better protect consumers, concludes the first major government-funded study on the issue.

      The 70-page report recommends measures that politicians, law enforcement agencies, businesses and consumers should be taking to combat a borderless crime that hits thousands of Canadians each year and drains tens of millions of dollars out of the Canadian economy.

      "It demands legislative and policy action, aimed at better protecting consumer information, deterring identity thieves, and assisting victims," states the study, published by the Public Interest Advocacy Centre, or PIAC, in Ottawa with funding from Industry Canada.

      "While consumers must certainly take responsibility for protecting their own personal information, the role of businesses - especially those in the credit and data-management industries - in facilitating I.D. theft demands attention," the study states.

      Among the study's recommendations:

      - Existing criminal laws should be enforced more aggressively, complemented by new rules that make it illegal for someone to hold identity documents under multiple names.

      - Businesses should be legally required to publicly disclose when major data leaks occur, and consumers should have the legal right to withhold personal information - and not be denied a service or be discriminated against - when it's not necessary for a transaction.

      - Certain government agencies and businesses need to reduce their reliance on social insurance numbers as a means to identify citizens and customers.

      - Industry, governments and consumer groups should develop a standard "ID theft affidavit" that simplifies the process of disputing fraudulent debts.

      In Canada, there were 8,817 reported victims of identity theft in the first nine months of this year, exceeding the full-year 2002 figure of 8,178, according to PhoneBusters, a national clearinghouse for telemarketing and identity theft complaints.

      Dollar losses were $14.1 million in the first three quarters, up 60 per cent compared to 2002.

      Identity thieves commit fraud and other crimes by impersonating their victims, usually by stealing someone's personal information or aggregating publicly available data about them. Crime groups or those acting alone can use the information to open bank accounts, make credit-card purchases, obtain loans and harm reputations.

      There's no shortage of data out there. In September, two Bank of Montreal computers containing detailed customer financial data were sold to a university student without being properly erased. The student almost resold the machines on eBay before discovering the gaffe.

      Similar privacy breaches have hit ISM Canada, a division of IBM Canada, and the Canada Customs and Revenue Agency, highlighting loose security practices among public and private sector organizations.

      John Lawford, a research analyst at PIAC and co-author of the study, said financial institutions have made it too easy for consumers to get credit, and rapid advancements in computing and Internet technologies have made it effortless to collect, store and access personal data.

      These two factors have contributed to creating "the perfect storm" for crime, said Lawford, adding identity thieves are using the confusion caused by this storm and weakness in the system to make easy money.

      "Businesses rely on a credit system that has flaws in it, and this makes it easy for criminals to prey on people," he said.

      "This isn't just a problem that can be rectified by more careful behaviour on the part of consumers," said Philippa Lawson, study co-author and director of the Canadian Internet Policy and Public Interest Clinic in Ottawa. "What we found is that a large part of the problem occurs because of problems in the business sector, such as lax security, and sharing of personal information between businesses in the marketplace. All things the consumer has no control over or knowledge of."

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