Thanks to rapidly-evolving technologies, identity theft has become one of the fastest-growing financial crimes in the world today.
Last year in Canada, more than 7,700 victims of identity theft contacted Phone Busters, the Canadian Anti-fraud Call Centre. They reported a total loss of $16 million.
Scams have evolved from simply stealing people's personal documents from their homes to hacking into the computer systems of large companies and extracting customers' personal data. Other scams involve tricking people into providing their personal information with fraudulent emails or phone calls.
To combat this growing problem, Justice Minister Rob Nicholson announced last week that the government plans to criminalize identity theft and give police the ability to prevent the damage before fraud has been carried out.
He said new technologies have enabled identity theft to become a widespread criminal activity, often involving organized crime.
The announcement was embraced by many, including Privacy Commissioner Jennifer Stoddart, who said that while the plan is a "welcome first step," the government needs to develop a "broad-based strategy" to combat the problem.
"The financial repercussions of losing their personal information can be crippling, and can affect victims for years to follow," said Stoddart. "The problem of identity theft highlights the value of personal information and the need to protect it."
Experts warn that identity thieves can attack in a variety of ways, including taking personal info from documents thrown in the garbage, using SIN cards from stolen wallets, and coaxing credit card info over the phone.
No matter what form it takes, the ramifications for the victim can be devastating.
The following are tips recommended by RCMP to avoid becoming a victim of identity theft:
• sign all credit cards when you receive them
• never loan your credit cards to anyone
• cancel credit cards you do not use and keep a list of the ones you use regularly
• immediately report lost or stolen credit cards and any discrepancies in your monthly statements to the issuing credit card company
• never leave receipts at bank machines, bank wickets, in trashcans, or at unattended gasoline pumps; ensure you destroy paperwork you no longer need
• never provide personal information such as SIN, date of birth, credit card numbers, or PIN over the telephone unless you initiate the call
• promptly remove mail from your 'secure' mailbox after delivery and do not leave pieces of mail lying around your residence or work site
• shred or otherwise destroy pre-approved credit card applications, credit card receipts, bills and related information when no longer needed
• avoid keeping a written record of your bank PIN number(s), social insurance number and computer passwords, and never keep this information in your wallet or hand bag
• avoid mail or telephone solicitations disguised as promotions or surveys offering instant prizes or awards designed for the purpose of obtaining your personal details including credit card numbers
For more information including links from the Privacy Commissioner of Canada on how to fight identity theft, go to RCMP's website at: http://www.rcmp-grc.gc.ca/scams/identity_theft_e.htm
Personal identification numbers—or PINs—can be used to open credit card and bank accounts, redirect mail, establish cellular phone service, rent vehicles, equipment, or accommodation, and even secure employment.
Tim Richardson, an e-commerce professor who teaches courses on identity theft at Seneca College and the University of Toronto, says one of the reasons identity theft is on the rise is the ease with which intruders can hack into people's computers.
"Think about guns for example; … can you imagine what would happen if you're walking down the street and guns are lying on a ditch and there's an arrow that says here's the bullets and there's another little arrow that says here's how to load it? Well, this is the problem with the Internet," says Richardson.
"There are many websites where people can download simple hacking software and then use it to hack people, and then [there are] instructions in chat rooms and message boards about how to do hacking, and there is no law against that."
The problem becomes particularly alarming when it involves the theft of information from companies with large databases of personal information.
Earlier this year, TJX Cos., the parent firm of Canadian retailers Winners and HomeSense, announced that hackers had intruded into their computer system, compromising millions of credit card accounts stored in their database.
Around the same time, CIBC announced that a computer hard-drive containing the private information of almost half a million customers had gone missing when it was being moved from one location to another. While there have been no signs of improper use of the information so far, customers have nevertheless been shaken by the threat of having their private data end up in the hands of the wrong people.
In a 2002 report, Auditor General Sheila Fraser noted that the Canadian Council of Better Business Bureaus reports stolen ID as one of its top concerns, and that Equifax Canada Inc., a consumer and commercial credit reporting company, had seen an increase in the incidents of identity theft it handles from 4,000 cases in 1998 to 12,000 in 2001.
The Auditor General said that there are many flaws in the management of the Social Insurance Number (SIN) system that can lead to SIN fraud developing into a scheme to obtain government services or credit fraudulently.
She also noted that there are 2.4 million more SINs in Canada than there are people.
"If you look at the number of programs that are linked to the Social Insurance Number itself there's great concern if we've got any more than we should," says Jason Clemens, director of research quality and resident scholar in fiscal studies at the Fraser Institute.
"It [SIN] underpins a whole host of government programs, both federal and provincial, but it's also used in the private sector, in terms of linking, or identifying people, so it's a critical mechanism used in Canada for identification."
Clemens says that while the exact reason for this discrepancy is not known, it could be due to a variety of reasons: clerical errors such as not invalidating the SINs of deceased people, SIN's of people who have left the country, and SIN fraud by organized crime.
"We don't know what is driving these large problems," says Clemens, who says despite some improvement, there are still "pretty large-scale problems in the Social Insurance Number system."
Additional reporting by Sandra Shields in Vancouver
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