Bill S-4 (Historical)

An Act to amend the Criminal Code (identity theft and related misconduct)

This enactment amends the Criminal Code to create offences of identity theft, trafficking in identity information and unlawful possession or trafficking in certain government-issued identity documents, to clarify and expand certain offences related to identity theft and identity fraud, to exempt certain persons from liability for certain forgery offences, and to allow for an order that the offender make restitution to a victim of identity theft or identity fraud for the expenses associated with rehabilitating their identity.

[The Chair, Conservative, Ed Fast]

I call the meeting to order.

This is meeting number 36 of the Standing Committee on Justice and Human Rights. Today is Monday, October 5, 2009. Just as a note, today's meeting is being televised.

You have before you the agenda for today. We have two matters to deal with. During the first hour, we'll begin a review of the Canadian Human Rights Act, more particularly section 13. We also have two witnesses appearing on that matter. And just so you know, during the second hour we'll return to our review of Bill S-4, An Act to amend the Criminal Code (identity theft and related misconduct). We have one witness appearing on that bill.

Once again, I remind everyone in this room to please turn off their BlackBerrys or set them to vibrate. We want to make sure there are no disturbances during our meeting. If you are receiving a call, please take it outside of this room. Thank you for your cooperation in this regard.

Now to get back to the Canadian Human Rights Act, to help us with our review we have two witnesses as individuals, Mark Steyn and Ezra Levant. Welcome to both of you. You've probably been apprised of the process. Each of you has 10 minutes to present, and then we'll throw the floor open for questions by our committee members.

Mr. Levant, perhaps you could start. You have 10 minutes.

Identity Theft

[Rob Nicholson, Conservative, Minister of Justice and Attorney General of Canada]

Mr. Speaker, in fact the government has reintroduced a bill that would take aim at identity theft and would give police the tools they need to stop this activity before the damage is done. We know that organized crime and modern technology are changing the criminal landscape to make identity theft easier than ever. I have been calling on the opposition to expedite the passage of this bill. This is the second time we have introduced the bill. What is the problem with those people? Let us get Bill S-4 passed.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Just before you adjourn, I'm concerned that the title insurance people weren't here today. I understood from the work my office had been doing with them that they did want to appear. There had been contact with the clerk of this committee. I saw the list this morning and they weren't on, and I don't know what has happened. It may be that they could not make this meeting. I still believe we should give them the opportunity to appear.

So in our scheduling over the next week or two, I would like to see that they come back and that Bill S-4 is on, even if it is for a short period of time, at another meeting.

[C/Supt Stephen White]

Unfortunately, I'm not familiar enough with it to present a position on how it interacts with Bill S-4 at this point.

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Thank you, Superintendent White.

In response to a question that you answered for my friend Mr. LeBlanc, and also for Ms. Brunelle, I think, regarding advancements in technology that white collar criminals and organized crime frequently employ, I think your response--and I don't mean to paraphrase you, because I know I'll do it inaccurately--was that law enforcement has a difficult time keeping up to the technological advancements that white collar criminals have access to, and that you're always a step behind, but this is one tool.

I was just wondering if you might be able to comment on this. I know you are not here to testify on Bill C-46, but you might be able to comment on how the interaction of Bill S-4 with Bill C-46 might operate. Bill C-46 is the technical assistance for law enforcement in the 21st century act, if you are familiar with that piece of legislation. How might that facilitate another tool?

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Thank you very much, Mr. Chair.

Thanks to all the witnesses for your excellent presentations.

I want to pick up on a question for the Canadian Bar Association that my friend Mr. Comartin raised with respect to your objections to clauses 7 and 9. I thought I understood this, but I was confused by some of the dialogue.

In light of the law enforcement exemptions that currently exist in section 25 of the code, why specifically do you advocate that clauses 7 and 9 of Bill S-4 be removed?

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much, Mr. Chair; and thank you to the witnesses for being here today.

I'm usually, and in this instance, particularly concerned about victims. They are the people who seem to be least considered when legislation is being formed. But in Bill S-4, as far as I'm concerned, the victim seems to be the primary concern, and that's a refreshing change.

This question is primarily for the RCMP, but Ms. Stoddart, please feel free to interject should you have something to add that you feel is pertinent.

What I particularly like about this bill is that it contains a provision where offenders will be required to pay restitution to the victims of identity theft and fraud when it comes to the costs of reclaiming their own identity. As I've mentioned, this is a welcome provision.

Having been recently a victim with one of my credit cards being cloned, I can say it didn't cost me anything directly, but we all have to be adult enough to know that when the credit card companies suffer a loss, guess who ends up paying for that loss: it is each and every one of us. So as we attempt to mine out these organizations, these criminal enterprises, and go after them, I believe this is a welcome provision.

By the way, I recently saw some numbers on the cost of identity theft, and I think it was conservatively estimated, just for Canada alone, at about $2 billion a year. Again, because of its nature, we don't know, but $2 billion as a conservative estimate means it's probably closer to $4 million or $5 million, I suspect.

Chief Superintendent and Inspector, in your experience, what kinds of hardship will a person who is victimized by identity theft face, and how likely are they to recoup anything? I ask that not to be facetious or anything. I know much of it will be anecdotal, when you speak to members who are in the field, etc.

Perhaps Ms. Stoddart can then also comment from her perspective.

[Chief Superintendent Stephen White, Director General, Financial Crime, Royal Canadian Mounted Police]

Thank you.

Good afternoon, Mr. Chair and honourable members of the committee. Thank you very much for inviting us to be a part of today's hearing. Here with me is Inspector Kerry Petryshyn, officer in charge of major fraud and bankruptcy within our commercial crime branch.

I appreciate having this opportunity to present the RCMP's perspective on the current state of identity theft and fraud in Canada.

White collar crimes come in many different forms, including mass marketing fraud, payment card fraud, identity theft and identity fraud, capital markets fraud, and money laundering, as a few examples. The significant growth of technology and the widespread use of computers have led to great advances in research and global communications, but they've also opened the floodgates for enterprising criminals. Technology has had a significant impact on the manner in which economic crimes are committed, their frequency, and the challenges faced by investigators dealing with this type of crime.

As businesses and financial transactions become more and more Internet dependent, new opportunities are emerging to facilitate financial crimes. Before computers and the widespread use of the Internet and other associated technology, stealing and using another person's identity was a relatively difficult crime to commit. Criminals had to invest considerable time and effort in the process, and the risks were high. To assume someone's identity, a thief had to break into a house, or steal a purse or a wallet. Today's technologically adept thieves can do just as much damage in the time it takes to swipe your bank card through the reader at a cash register.

The same technology that has made our lives more convenient by allowing us to shop from home and operate in a virtually cash-free marketplace has also given rise to countless new criminal opportunities for identity thieves.

They can now steal your personal information from the comfort of their home offices half a world away, taking advantage of everyday transactions that require people to share personal information for identification purposes.

The growing impact of identity theft and fraud is deeply troubling. A 2008 EKOS survey found that 9 out of 10 Canadians were somewhat concerned that they could be victimized by identity theft and fraud. The survey also indicated that Canadians ranked the economic crimes of fraud and identity theft as their number one concern, more troubling than terrorism, organized crime, and gang violence.

That's why we have to view economic crime as being every bit as serious as many other types of criminal activity. It is true that identity theft and fraud, for example, are less physically dangerous than many types of criminal activity; however, their social damage can be very severe and can undermine the trust that people have in their society.

The cost to a person who has had his or her identity stolen can be enormous: financial loss and the investment of hundreds of hours trying to re-establish identity and good credit all take their toll.

A recent study by McMaster University estimated that in 2008 1.7 million Canadian identity theft victims spent 20 million hours and $150 million clearing their names. Of course, individuals aren't the only victims. Stolen identities are also used to commit frauds involving government services, benefits, and official documents. Financial institutions and retailers, the foundation of our economy, suffer growing losses every year.

Evidence indicates that identity fraud isn't just committed by enterprising individuals. Organized criminal groups are also applying their considerable resources to this expanding field of opportunities.

Quantifying the damage is extremely difficult. Many instances of this type of fraud go unreported, so definitive statistics are hard to come by. PhoneBusters, the Canadian Anti-Fraud Call Centre jointly operated by the RCMP, the Ontario Provincial Police, and the Competition Bureau of Canada, can only maintain statistics on the complaints they receive. In other words, the more than 11,000 complaints received by the call centre in 2008 reflect only a small percentage of the problem.

The Canadian Council of Better Business Bureaus indicated that identity theft was the fastest growing type of fraud in North America, with the cost to consumers, banks, credit card firms, and retailers estimated to be in the billions of dollars each year.

Raising public awareness about protecting personal information is currently the best tool we have for preventing identity fraud. Along with members working in RCMP detachments across the country, members in our financial crime units make numerous presentations to educate the public on this issue.

Whether these presentations are made to businesses, government agencies, or community groups, the messages are the same: protect your personal information, shred unwanted personal documents, and be wary of suspicious e-mails. Prevention is still the best cure, but prevention can only do so much.

Identity fraud is clearly emerging as an immense problem. In consultation with key stakeholders and other law enforcement agencies, the RCMP is developing an identity fraud strategy focusing on criminal intelligence and analysis, prevention through education and awareness, and disruption and enforcement.

We are also heading up the creation of an international identity fraud working group, the objective of which is to obtain an overview of other countries' identity fraud strategies, discuss related joint priorities, and develop an international strategy.

Currently the Criminal Code does not contain specific offences pertaining to identity theft. Most Criminal Code offences relating to property crimes were enacted before computers and the Internet were even invented. While the Criminal Code addresses most fraudulent uses of personal information by identity thieves, it does not address the unauthorized collection, possession, and trafficking of personal information for the purpose of future criminal activity.

As I indicated in my opening remarks, the changing environment is one of the greatest challenges we face in our efforts to combat financial crime. The growing sophistication of this type of criminal activity is abetted by the same techniques and technologies that spur legitimate opportunities for business.

Why be reactive when we can be proactive? We must be constantly examining our environment to identify new tools that can greatly assist us in investigating white collar crime.

Bill S-4 will close legislative gaps that currently allow criminals to collect, possess, and traffic in personal identification information and documents. Legislative amendments aimed at closing the identity theft gap would help the RCMP and other law enforcement agencies protect not only individual Canadians but also the integrity of our economy. We welcome laws that will move us closer to this goal.

Mr. Chair and honourable members of this committee, that concludes my prepared remarks. Now we will be happy to answer any questions you may have.

Thank you.

[Daniel MacRury, Treasurer, National Criminal Justice Section, Canadian Bar Association]

Thank you, Mr. Chairman.

I would like to thank the honourable members for the opportunity to make a submission today on behalf of the Canadian Bar Association criminal justice section.

The Canadian Bar Association criminal justice section commends the efforts of Bill S-4 to address identity theft and related criminal activity, as these are serious problems giving rise to significant individual and societal losses. We appreciate that Bill S-4 would restrict the scope of some of the proposed new offences so as not to inadvertently capture unrelated or innocent conduct, particularly in relation to new offences concerning identity documents and information. We also support Bill S-4’s proposed removal of certain reverse onus provisions of the Criminal Code. We recommend several amendments that we believe add clarity and certainty to the proposals contained in Bill S-4.

The CBA criminal justice section's comments today are guided by three principles. One is the principle of legislative restraint. Revisions to the Criminal Code should only be made where existing provisions are inadequate. Two, any new proposals must comply with the Charter of Rights and Freedoms. Three, changes to the Criminal Code alone are generally insufficient to address serious or complex problems. To be effective, such changes must be accompanied by refinements in law enforcement practice and procedure, increased public education, or other legislative amendments.

The last observation may be particularly applicable to the problem of identity theft. The federal Privacy Commissioner and other organizations have noted that an effective response to identity theft will require a comprehensive approach, including a broad range of initiatives in addition to changes to the Criminal Code. In other words, there has to be more than one tool in the toolbox to address this serious problem.

We would like to make the following recommendations. First, Bill S-4 should be amended to expressly exclude the general provisions of attempt and counselling and certain types of de minimis behaviour.

Second, the relationship between the new offences proposed in Bill S-4 and the existing general provisions should be clarified.

Third, the proposal to prohibit possession of identity information should be amended to offer greater clarity by replacing the term “is reckless” with more explicit language.

Fourth, the exemption for certain police activities in clauses 7 and 9 of Bill S-4 should be removed.

In relation to recommendations one and two, the bill defines a new category of documents described as identity documents. It proposes a wide range of offences, including procurement, possessing, and selling social insurance numbers, drivers licences, etc. Given the combined scope of the definition and the proposed offences, we believe that the bill's proposal to add new defences to the existing concept of lawful excuse is appropriate. It is a clear attempt to restrict the reach of these provisions and is consistent with the concerns we have addressed in the past.

In spite of Bill S-4's proposed restrictions, other jurisdictions go further to restrict the reach of similar provisions in two ways. First, they expressly exclude the general provisions of attempt and counselling. Second, they expressly exclude certain types of de minimis behaviour, such as for young persons possessing identity documents to gain admission to licensed premises.

The criminal justice section recommends that Bill S-4 be amended to expressly exclude general provisions of attempt and counselling and certain de minimis behaviour. There also should be some clarity between the existing provisions and the new bill.

On our third recommendation, the section believes that the term “reckless” should be clarified. Proposed section 402.2 prohibits possession for the purpose of transmission, making available, distribution and sale, or offer for sale of that information where an individual knows, believes, or is reckless as to whether the information will be used to commit an indictable offence containing an essential element of fraud, deceit, or falsehood.

Including recklessness as a form of the mental element for this offence could be seen as responding to the Supreme Court of Canada in R. v. Hamilton. We also note concerns about the formulation, particularly as it might apply to businesses or industries that handle large volumes of such information. While the term “reckless” is used in the Criminal Code, it is not free from controversy and occasional interpretive difficulty.

To provide greater clarity and to address some of the business and industry concerns, we suggest more explicit language. For example, in R. v. Hamilton, the Supreme Court of Canada equated recklessness with “conscious disregard of the substantial and unjustified risk”.

In the Hamilton decision, the Supreme Court of Canada, at paragraph 28, stated:

The “substantial and unjustified risk” standard of recklessness has venerable roots in Canada and in other common law jurisdictions

It cited cases, and then the court went on to say:

Finally, a brief word on R. v. Sansregret.... The Court in that case defined recklessness as the conduct of “one who, aware that there is danger that his conduct could bring about the result prohibited by the criminal law, nevertheless persists, despite the risk...in other words, the conduct of one who sees the risk and who takes the chance”.... The Court, in Sansregret, did not set out the degree of risk required to attract criminal sanction.

As well, in the decision, the Supreme Court of Canada said at paragraph 33:

We have not been invited in this case to revisit Sansregret or to consider afresh the governing principles of recklessness

It is our submission today that, without clarity in the definition, the courts will have to consider afresh the governing principles of recklessness.

That deals with our concern in relation to recklessness.

Our fourth recommendation to you today deals with the exceptions for police and other official acts. Clauses 7 and 9 propose another exemption for certain activities for public officers as defined by section 25.1 of the Criminal Code. Given the existing legislative scheme, it is unclear why another exemption might be necessary. The Canadian Bar Association criminal section has strongly opposed an exemption from criminal liability for police or their agents, arguing that the law should apply to everyone, but acknowledges that the existing sections contain certain detailed procedural safeguards and reporting requirements. We see no reason the acts specified in Bill S-4 would be inadequately addressed by the existing scheme, and we are opposed to creating further exemptions of this sort.

The criminal justice section recommends that the police activities in clauses 7 and 9 of Bill S-4 be removed.

In conclusion, this section recognizes the prevalence and seriousness of identity theft. We appreciate the efforts in Bill S-4 to provide narrowly circumscribed new offences to address the issue without inadvertently capturing what should properly be non-criminal activity. To further advance this objective, we suggest some clarity in the language of the bill—for example, surrounding the mental element of recklessness, as well as a clarification of the interaction between some of the proposed offences and the attempt and counselling provisions of the code. We also appreciate the proposal to increase the use of a hybrid structure of offences to give greater flexibility and scope to prosecutorial discretion in dealing with these matters.

I would like to thank the honourable members for this opportunity this afternoon.

[Gaylene Schellenberg]

Thank you for the invitation to present the Canadian Bar Association's views on Bill S-4 to you today.

The CBA is a national association of over 37,000 members, including lawyers, notaries, law students, and academics. An important aspect of our mandate is seeking improvement in the law and the administration of justice, and it's from that perspective that we appear before you today.

With me is Dan MacRury, the current treasurer of our national criminal justice section. The section represents a balance of crowns and defence lawyers from every part of the country. Dan is a prosecutor from Sydney, Nova Scotia. I'll turn it over to him to present the substance of our submission to you.

[Jennifer Stoddart, Privacy Commissioner of Canada, Office of the Privacy Commissioner of Canada]

Thank you very much, Mr. Chairman. I don't think I'll take 10 minutes.

I have appeared on this question several times in the past few years. I've been fairly outspoken about the problem. I'm very pleased to see that the government is taking action on it today.

Polling conducted by my office this year has revealed that one in six Canadians has experienced some form of identity theft. Over 90% of Canadians are concerned about this issue of identify theft.

As you know, identify theft is a broad term that is often used to describe a wide range of behaviour. It can include credit card fraud, it often involves pretexting--pretending to be someone else in order to purchase goods or services or obtain that person's personal information. There are also more sophisticated techniques such as skimming, which involves stealing personal information from the magnetic strips of debit and credit cards through the use of small electronic devices.

I'm sure everyone here has received numerous phishing e-mails from what appear to be reputable organizations such as banks and caisses populaires--even the Government of Canada was a victim of phishing last year--asking us to verify our account information or provide personal information to the sender.

As technology evolves, identity thieves are constantly looking for new ways to obtain personal information. Just last month a man who has been called the world's most prolific identity thief pleaded guilty in Florida to stealing tens of millions of credit and debit card records by identifying and exploiting weaknesses in retailers' wireless networks.

Identity thieves then use this personal information to withdraw money from bank accounts, obtain loans or credit cards, obtain government benefits and even take out mortgages.

We often talk about identity theft in terms of the financial cost and while victims of identity theft may suffer significant financial loss, they are also likely to feel that their privacy has been invaded.

The lessons of the past few years teach us that stronger protections are needed if privacy is to have any meaning at all in the face of contemporary challenges. Bill S-4 is a significant step in the right direction. However, it should form part of a broader-based strategy to address identity theft and identity fraud.

The recent introduction of anti-spam legislation is also an important contribution to this process. The proposed Electronic Commerce Protection Act prohibits the sending of unsolicited commercial electronic messages without consent. It includes targeted provisions against phishing and spyware, and it provides a private right of action against spammers. The Act also sets out a coordinated approach to enforcement that allows for co-operation and information sharing with foreign authorities.

So that's another piece of legislation that is already before this House.

I would like to see a similar coordinated approach to ID theft. We have the expertise and the resources. There is the PhoneBusters anti-fraud call centre operated by the RCMP, the Competition Bureau, and the Ontario Provincial Police. There are excellent resources on identity theft on the Safe Canada website set up by Public Safety Canada. Now we really need the police and regulators, the public and private sectors, and federal and provincial officials to work together.

In our recommendations for the reform of the Privacy Act we have asked for stronger regulation, including better security safeguards, and we continue to believe that broader access to the courts is important for Canadians. In the review of our private sector legislation, PIPEDA, we have similarly recommended changes that would allow us to better regulate personal information handling practices, and we have called for mandatory breach notification for the private sector. These measures would empower Canadians to prevent identity theft and motivate companies and government organizations to properly safeguard personal information under their control.

Thank you once again, Mr. Chairman, for inviting me to speak on this very important issue. I will answer any questions as best I can.

[The Chair, Conservative, Ed Fast]

I call the meeting to order.

Welcome, everyone, to the 34th meeting of the Standing Committee on Justice and Human Rights. Today is Monday, September 28, 2009.

You have before you the agenda for today. You will have noticed that today we are continuing our review of Bill S-4, An Act to amend the Criminal Code (identity theft and related misconduct).

We have before us four organizations.

Just so you know, one organization cancelled. The Canadian Association of Chiefs of Police had to bow out at the last minute. That leaves us with four organizations.

First, representing the Information Technology Association of Canada, we have Bernard A. Courtois.

We also have the Office of the Privacy Commissioner of Canada. Jennifer Stoddart is the commissioner, and Carman Baggaley is the strategic policy adviser.

Representing the Canadian Bar Association, we have Gaylene Shellenberg, who is a lawyer with that organization, and also Daniel MacRury, who is the treasurer.

Finally, we have the RCMP represented. We have Chief Superintendent Stephen White and also Inspector Kerry Petryshyn.

Welcome to all of you. I think you've been told the process. Each organization has 10 minutes to present. Then we'll open the floor to questions from our members.

Mr. Courtois, please proceed. You have 10 minutes.

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

On that point, with the prospect of dissolution and an untimely and, in my view, unnecessary fall election, what advice do you have to this committee to get Bill S-4 through committee and the House, and the other very important bills, too, before we're thrust into an unnecessary election?

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Thank you for that.

At some point, we're going to be asked to do a clause-by-clause examination of this bill. I wasn't part of the 39th Parliament, but I understand that Bill S-4 in its original form is substantially the same as Bill C-27. The Senate made some amendments to Bill S-4.

In your view, Minister, are the amendments appropriate? Did they strengthen the bill?

[Brent Rathgeber, Conservative, Edmonton—St. Albert, AB]

Thank you, Mr. Chair.

Thank you, Mr. Minister and your officials, for your attendance here this morning. Once again, thank you, Minister, for promoting your very aggressive safe street and safe community agenda.

We've dealt with a number of pieces of legislation in this committee--Bill C-14 with respect to organized crime and Bill C-15 with respect to mandatory sentences for those who traffic in narcotics. Now we're dealing with identity theft, a bill that originated in the Senate and is now before the House of Commons justice committee.

With respect to your overall anti-organized crime agenda, we've certainly heard anecdotally and otherwise that identity theft is the crime of the 21st century. You indicated in your comments that often law enforcement has a difficult time keeping up to advances in organized crime, with technology and high-tech devices, the Internet, and so on.

Mr. Minister, can you tell us specifically how Bill S-4 deals with the government's overall strategy and its motivation to combat criminal activity and organized crime?