November 7, 2003
by June Chua

Dan and Sharon Millar of Hamilton, Ontario, noticed their TV Guide didn't arrive at its usual time. It was February 2002 and the guide always arrived on the first Tuesday of the month. As the couple waited they noticed they weren't getting their letters and packages. A few weeks went by and their mail had stopped altogether.

"The red flags didn't go up until Canada Post called me and I was absolutely stunned," Dan Millar said. Someone had applied for a change-of-address form, diverting all of the Millars' mail and getting important personal information. By the time authorities started investigating, someone had applied for and received a credit card in the Millars' name. They were lucky, it could have been worse.

"It's of great concern to us," RCMP Inspector John Sliter of the economic crimes branch told CBC News Online. "There's been an explosion in identity theft in the past few years." Sliter says about 20,000 new cases popped up in 2002 - those are just the cases reported by the country's three credit bureaus. Identity thieves slowly build up a profile using pieces of information - a social insurance number and a date of birth are all that's needed to assume another person's identity. Once they have acquired an identity, they can take over financial accounts, transfer bank balances, apply for loans and credit cards, and purchase items.

ID factories uncovered by RCMP

"We're seeing more ID factories," Sliter said.
"They're making hundreds of IDs a day." Sliter says technological advances in computers and photocopying machines have made it easier for thieves to steal and create identities.

Identity fraud is the fastest growing kind of fraud in North America. The U.S. Federal Trade Commission says it accounts for 40 per cent of all consumer fraud complaints. Privacy advocates in the U.S. say the there may be as many as 750,000 victims a year. Senator Maria Cantwell, a Democrat from Washington state, says identity thieves have targeted more than one in five American families. Cantwell is pushing for more restrictive legislation that would:

• limit information printed on credit card receipts
• penalize credit card companies that issue new cards after an "alert" has been placed on a file
• expand the authority of local law enforcement agencies to deal with identity theft

The Council of Better Business Bureaus in Canada estimates identity theft costs $2.5 billion a year to consumers, banks, credit card firms, stores and other businesses. The council says identity theft is growing exponentially and many blame the advent of electronic communications: the Internet.

"The relentless tide of e-commerce changes personal identity to a cipher," says Nicholas Hodson, a fraud risk consultant at Ernst and Young. "You stop being a person (and) start becoming pieces of data." (The Financial Post, Jan. 29/00) According to Canada's social insurance registry, there are about 1.4 million more social insurance cards in circulation than there are people in this country.

"We're prepared to believe that you are the person those papers claim you are"

It's a question of trust says Norman Inkster, the president of KPMG Investigations and Security.

"We...have been in the habit of relying on one or two key pieces of paper for information," says Inkster. "Based on that, we're prepared to believe that you are the person those papers claim you are." Canada Post, for instance, requires two pieces of ID for address changes. The agency's managers admit it's hard to catch bogus applications.

"Forgeries are very, very good these days," says John Caines of Canada Post. "We have to look at the address, the new one and the old one, to verify them. And we have to look at the signatures...We can only hope that you are who you say you are." In 2001, Canada Post caught 400 cases of fake address changes, a 10-fold increase from the year before. Inkster says other countries use identification cards with photos on them and that's where Canada may be headed, along with the use of biometric data: face, hand or iris recognition systems.

Special concern after Sept. 11

ID theft has been given special concern in light of the terrorist attacks of Sept. 11, 2001. It's not just a matter of an individual losing money and his or her identity, it's now a matter of security.

The terrorists used fraudulent driver's licences, birth certificates, student visas and passports to gain access to the U.S. The U.S. government has said terrorist cells operating in Canada are using stolen IDs. Police, financial institutions and consumer groups say people need to be vigilant in protecting their data. The U.S. Congress passed the Identity Theft and Assumption Deterrence Act in October 1998. Violations of the act are investigated by federal law enforcement agencies, such as the FBI, and cases are prosecuted by the U.S. Department of Justice.

At least 46 states and territories have passed laws to address the problem. A conviction carries a maximum penalty of 30 years imprisonment, a fine and forfeiture of any personal property used or intended to be used to commit the crime.

In Canada, the penalties are generally less severe. Under the Criminal Code, impersonation with intent nets a prison term of up to 10 years. It's also up to the presiding judge to impose any fines or restitution the identity thieves may have to make to their victims. A person could also be charged with fraud, which can also lead to a 10 year prison term. Ontario introduced legislation in October 2001 to combat identity theft.

"The fundamental rights to security and freedom start with the assurance that people are who they say they are," said former minister of consumer and business services Norm Sterling. Fines for providing false information when applying for "vital" documents such as a birth certificate have been boosted from $1,000 to $50,000 and/or jail sentences of up to two years for individuals, and to $250,000 for corporations. The RCMP would like to see tougher legislation, everywhere.

"We need unified legislation on offences," says inspector Sliter.

He says the RCMP wants the current law strengthened. For instance, police would want carrying multiple identities to be an offence. The RCMP formed a four-person unit in 2002 to coordinate investigations of ID theft. The unit will oversee the RCMP's 475 economic crime officers located across the country. They have also liaised with local law enforcement.

"When you make a call to our toll-free PhoneBusters line, we will contact the appropriate authorities: the credit card company and your local police service. We will profile and package your case and hand it over to local investigators," says Sliter. In 2001, the RCMP worked out agreements with credit card-issuing companies to persuade their clients to report instances of credit card fraud to the RCMP's "PhoneBusters" unit. Credit card-issuers, such as Visa, MasterCard and even Canadian Tire, were reluctant to report instances of fraud out of respect for the privacy of their clients.

"Any thread of information we get can lead to a major bust," says Sliter. "We had one case where a person, pretending to be someone else, tried to get a credit card. We were alerted and the investigation led to us to an international organized crime ring."