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COLD CASH LOOKING BETTER AMID CANADIAN E-COMMERCE SECURITY BREACHES

Posted on February 9, 2007

      Forget the idea of a cashless society. An increasing number of Canadians are questioning the safety of electronic transactions in the wake of massive security breaches and loss of personal information at major companies in Canada. It's a problem that's even turning some off the convenience of plastic in favour of cold, hard cash.

      "It's making people really think twice," said Philippa Lawson, director of the Canadian Internet Policy and Public Interest Clinic. "The more these kinds of breaches are publicized, the more people will be questioning companies and maybe even paying with cash."

      More than two weeks after news of major security problems at Winners, HomeSense and CIBC's Talvest Mutual Funds in which personal information was lost or used for fraudulent activity, privacy experts say they're hearing from many Canadians who are frustrated and disillusioned with the world of electronic commerce. It's a situation that is unlikely to improve anytime soon, considering the fact future security breaches at other problems are all but inevitable.

      "These types of security problems are going to become more and more commonplace," said e-commerce expert and author Rick Broadhead. "We're living in an age where more and more people are doing transactions online. More and more information is stored in online archives. It's not surprising that this is happening."

      But the growth in security problems is having a significant impact on consumer confidence and is leading some to change their habits, said Toronto technology risk consultant Anna Wilson.

      "I know I wouldn't be surprised if a lot of people started going back to (using cash) given the nature of events that we keep hearing about," said Wilson, who despite her expertise, became a victim of identity theft in December.

      A growing number of Canadians are becoming aware of the fact that if they rely on credit and debit cards, as well as online shopping and banking, their personal and financial information could be vulnerable to thieves. And if you don't think twice about swiping that card while out shopping, you probably should, Internet privacy experts agree.

      "I don't do an electronic transaction unless there is no other option," said Darrell Evans, executive director of the Freedom of Information and Privacy Association in British Columbia. "To me, it's a last resort."

      If cutting up credit and debit cards isn't an option, then Canadians can do themselves a favour by keeping tabs on who collects their personal information - and why, Lawson said.

      "I hope that people will start challenging companies that are asking them for their telephone numbers and postal codes and asking companies about whether they're holding onto this information and using it for other purposes," she said.

      A major part of the problem is the fact few banks and other institutions have adequately invested in ensuring online transactions are secure and difficult to hack, said John Lawford, counsel for the Public Interest Advocacy Centre.

      "So much of their business has moved online but not as much of the security has been built around it. It's sort of like they've built a bank branch without putting walls around it. It's odd."

      Although there are security problems within many sectors, some experts say the retail industry stands out as one where personal information could be in danger.

      "Definitely within the retail industry, it's historically and statistically known that they are a little lagging in terms of security, so you have to be very wary as to what's happening once the information is in their system," Wilson said.

      Unless they've been personally burned, many Canadians will likely continue to use plastic to shop because it's so convenient and almost impossible to avoid these days. But electronic transactions don't need to be a risky venture, as long as Canadians begin to realize many institutions don't have adequate privacy measures in place.

      It's time more citizens start asking why a cashier wants their postal code or whether a retailer will share their personal information with other companies, said Wilson.

      "We have every right to inquire as to how the information is going to be protected," she said. "There needs to be definitely much more awareness and a little bit more work on the part of the consumer."

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