Canadian Data Protection Laws Significantly Stronger than U.S.
Topic: Financial Privacy
In the United States we have the Social Security Number. Unfortunately, access to Social Security Numbers is all too common, and the results can be devastating. Identity theft and ruined credit. The inability to get or keep a meaningfull job. In the worst cases, severe stress that leads to breakup of families.

Because the banking lobby has its hand so deep in Congressional pockets that it may never see the light of day again, federal lawmakers have been unwilling to implement laws to protect consumers. In fact, late in 2003 both Congress and the White House significantly weakened the ability of the states to protect the personal privacy of their citizens. That?s when a President Bush signed the Fair and Accurate Credit Transactions Act. This law specifically forbids the states from passing any privacy laws that prevent credit grantors from sharing consumer data with their affiliates.

But our neighbor to the north is setting a different example. Like the United States, Canada has its version of the Social Security Number. In Canada it is called a Social Insurance Number (SIN) and there are strict limitations on those who can demand to see it.

Banks, brokerage houses, trust companies and credit unions are required to ask customers for their SIN. The government uses is for tax reporting purposes. In fact, according to the Canadian Privacy Commission, an official branch of the Canadian Government, ?No private-sector organization is legally authorized to request customers' SINs for purposes other than income reporting.?

Even credit reporting companies can?t demand a SIN to generate a credit report. Trans Union Canada and Equifax Canada both have the ability to generate such reports without a SIN. If you ask these same companies to generate a credit report in the United States, they both require a Social Security Number.

Companies without a need for access to a Canadian consumer?s SIN can still ask for it. They are however supposed to tell consumers that the information is optional. And they are not allowed to deny consumers services or to refuse sale simply because a SIN is not supplied.

All of this begs the question of whether or not these data protections actually help Canadians control cases of identity theft. The answer is largely dependent upon who you ask. Like Americans, Canadians will tell you that identity theft is out of control. And, just as in the United States, identity theft is the fastest growing form of financial crime. This however appears to be where the similarities end.

Canada is a country with roughly 10% of the population of the United States. Based on that figure, roughly 80,000 Canadians would have had to become identity theft victims last year for them to keep pace with the United States. As it turns out, Canada has not consolidated its statistics for identity theft. Even so, estimates are that Canada only experienced around 20,000 cases of identity theft last year. Moreover, the costs to the Canadian economy are still measured in millions of dollars, rather than the $54 Billion price tag associated with US cases.

The reason for the discrepancy is most likely due to the difficulty that would-be thieves have in getting their hands on Canadian SINs. The black market rate in Canada right now for a SIN along with a copy of a birth certificate is $50,000 CAN (approximately $30,000 US dollars). This means that to be an ID thief in Canada, you have to invest some money to get started. In the United States however, anyone can get their hands on a Social Security Number for less than $100. Experienced thieves can gain access to this information for nothing.

If the United States is serious about wanting to control cases of identity theft, perhaps our legislators should look north of the boarder for assistance. Canada may not have been able to stop all cases of ID theft, but they are far ahead of the United States in enacting policies that favor their citizens rather than caving to business interests.

by Jim Malmberg