The High Cost of Identity Theft in Canada

What is Identity Theft

Public Safety Canada defines identity theft as all types of crime in which someone wrongfully obtains and uses another person’s identifying information for the purpose of fraud or other criminal activity, usually for economic gain. The type of stolen data typically includes name, birth date, social insurance number, passport, driver’s license, and credit card numbers. There are significant emotional and psychological costs to identity theft. The effects can also have victims spending hundreds of hours and over a thousand dollars clearing their names and cleaning up and correcting their credit histories.

Canada and the United States are witnessing a growing trend of identity theft. Identity theft is being used to commit fraud but also has links to organized crime and terrorism, which can result in more catastrophic ends. Groups are using the border as a means to commit more elaborate and extensive schemes, making it more difficult for the authorities to track down and break up the crime rings.

Identity Theft Statistics

Identity theft has become one of the fastest-growing crimes. In 2002, Canadians reported over 8,000 complaints of identity theft amounting to nearly $12 million dollars. In 2004, there were just under 12,000 complaints, totalling $19 million dollars. 2006 totals were down in complaints at 7,778 but the dollar amount was just over $16 million. So although total complaints were lower, it appears that the dollar amount per complaint is higher. It is thought that the numbers are actually much higher as the majority of individuals do not report identity theft incidences. The Canadian Council of Better Business Bureaus estimates that identity theft costs the Canadian economy at least $2.5 billion a year. 

There are many reasons for the increase in identity theft occurrences. Consumers often become victims without any direct contact with the thief. By performing everyday activities such as banking at an ATM machine, using a debit card to purchase fuel at a gas station, or purchasing items at a retail outlet, unsuspecting individuals become victims of identity theft, only becoming aware of this when the bank card is declined or the bank or credit card company calls to inform the individual there are abnormal charges or activity on the account.

A telephone survey done in 2005 (Identity Theft Index Canada) indicated that 80% of Canadians think that identity theft is a serious problem. 25% have been a victim, or knew someone who suffered from an incident of identity theft. This explains why a third of the individuals indicated concern that they or someone they know will become a victim of identity theft.

Types of Identity Theft

There are several types of identity theft resulting in a wide range of costs for the victims. Of those polled who were victims or knew victims, 70% indicated that the crime was unauthorized credit card use. This is the most frequent type of identity theft and usually results in the lowest cost. Other types of reported fraud included: making charges using existing credit card accounts, opening new credit card accounts, taking out new loans, gaining unauthorized bank account access, and using victims’ personal information in other types of frauds (i.e. government benefits, medical care, etc).

Government Response

It is these types of statistics that are motivating government agencies to respond to protect citizens. The federal government amended the Personal Information Protection and Electronic Documents Act (PIPEDA) which requires organizations in the private sector to obtain the individual’s knowledge and consent before using or disclosing personal information for a purpose not originally consented to. It also ensures that consumers cannot be denied a product or service if they do not want to provide their Social Insurance Number (SIN) when it is not required by law.

With each new law that is approved by the government and every new security feature implemented by an organization, thieves seem to become more advanced in their abilities as well. It is up to the consumer to be aware of the dangers and take proper precautions to ensure that they themselves do not become a victim. It is equally important that, if they do experience an act of fraud, they take the necessary steps to minimize the impact to their lives: reporting the event to the authorities; informing banks, credit card companies and others of the event to flag their accounts; and monitoring all credit inquiries to ensure thieves do not open new accounts.