Information & Ethics Committee on April 3rd, 2014

[The Vice-Chair, Conservative, Patricia Davidson]

Good morning, everyone. We'll call the meeting to order.

I welcome our witnesses for this morning's presentation.

We have with us from the Royal Canadian Mounted Police, Superintendent Jean Cormier, director, federal coordination centres, and Inspector Cameron Miller, federal coordination centres, domestic region.

From the Department of Industry, we have Thomas Steen, major case director and strategic policy adviser, Competition Bureau, fair business practices branch, and Mr. Morgan Currie, acting assistant deputy commissioner of the Competition Bureau, fair business practices branch, division C.

Without further ado, we will open it up to our witnesses for their opening statements, starting with the Royal Canadian Mounted Police.

Go ahead, Mr. Cormier.

[Supt Jean Cormier, Director, Federal Coordination Centres, Royal Canadian Mounted Police]

Good morning, Madam Chair, and honourable members of the committee. Thank you for inviting the RCMP to participate in today's proceedings.

l am accompanied by Inspector Cameron Miller, who is the officer in charge at RCMP National Headquarters. He is responsible for the oversight of the operations and administration of the Canadian Anti-Fraud Centre, referred to as the CAFC.

The CAFC is a joint partnership between the Ontario Provincial Police, the Competition Bureau and the RCMP, and plays a crucial role in educating the public about mass-marketing fraud.

l am pleased to be accompanied by one of those partners, the Competition Bureau, represented by Mr. Morgan Currie, assistant deputy commissioner, fair business practices branch, and Mr. Thomas Steen, major case director and strategic policy adviser, fair practices branch as well.

I am pleased to have this opportunity to be joined by my colleagues here today and say a few words about the RCMP, our involvement in the CAFC and our role in addressing identity theft, along with our partners.

Identity theft is a serious matter with serious consequences.

Criminal groups exploit technological advancement to compromise personal information for illicit purposes. While identity theft is not new, the scope of the problem has grown substantially. Sophisticated groups are able to compromise entire computer networks, infect multiple individual computers, or design fraudulent websites to mine personal data on a massive scale.

Millions of personal records can be obtained through one targeted cyberattack. Identity theft has evolved from impersonating one or another person to the creation of totally synthetic identities. Criminals utilize personal information stolen from various individuals to obtain legitimate identification in a fabricated name, a synthetic identity, that is. Synthetic identities can then be utilized for a number of illicit purposes such as fraud, industrial espionage, money laundering, and terrorist financing.

Over the past decade, the unprecedented rise in crime associated with personal identity information has made this type of crime a primary concern for Canadians.

The impact of identity crime on victims is unlike that of other crimes. An individual's identity is the basis of almost every aspect of modern life, and when it is compromised, victims often suffer long-term consequences. Apart from economic or financial losses, there is often damage to reputation, loss of access to credit and other services, and in some cases, victims even face criminal prosecution for acts committed by others utilizing their names.

Another key concern is the increased involvement of organized crime groups in identity crime. These groups operate across national and international borders to evade detection and prosecution by law enforcement.

Consequently, identity crime is often multi-jurisdictional, crossing municipal and provincial boundaries. Globalization and the absence of cyberborders means that many cases have international links and implications, making it that much more complex.

In 2010, the Government of Canada recognized the growing seriousness of identity crime by amending the Criminal Code with the addition of offences specific to identity crime. In 2012, the RCMP, in consultation with private and public sector stakeholders, developed its national identity crime strategy.

To put the scale of the problem into context, consider the following.

In 2013, the RCMP opened 3,411 occurrences related to identity theft and fraud. For the same year, Norton, operated by Symantec, a security, storage, and system management solution provider, estimated that $113 billion was lost globally to cybercrime and that Canada's share was approximately $3 billion. Over 24,000 victims of identity crime contacted the CAFC to report losses in that same year, to a total of $11 million.

In 2012, Symantec reported that an average of 604,826 identities were stolen per data breach, which means over 93 million identities were exposed. An example of that is the targeted attack on Target Corporation which resulted in the payment card information of 100 million customers being compromised.

These figures highlight the importance for law enforcement to work collaboratively with domestic and international partners to prevent, detect, and pursue those who engage in such activities.

We believe that information sharing between the different domestic partners, Government of Canada departments and the RCMP, as it relates to preventing identity theft, is crucial to addressing the problem.

The aim is to educate, prevent, detect, and deter such criminal activity as well as to facilitate the investigation and prosecution of those involved in such criminal activity.

Identity theft directly impacts individuals, businesses, communities, Government of Canada and international reputations.

Education on how to protect one's identity is everyone's responsibility.

Although many Canadians are now aware of the different methods utilized by criminals to steal their personal information, continued vigilance is paramount.

The RCMP is committed to protecting Canadians' financial well-being by continuing to contribute to efforts to detect and deter identity theft and the use of victims' identity to perpetrate fraud.

I thank you for your interest on this concern.

We look forward to answering your questions.

[The Vice-Chair, Conservative, Patricia Davidson]

Thank you very much, Inspector Cormier, for your remarks.

Now we're going to be hearing from Mr. Currie.

[Morgan Currie, Acting Assistant Deputy Commissioner of Competition, Competition Bureau, Fair Business Practices Branch Division C, Department of Industry]

Thank you, Madam Chair, for the invitation to speak to you today about identity theft.

My name is Morgan Currie and I am an assistant deputy commissioner in the fair business practices branch, which is an enforcement branch of the Competition Bureau part of Industry Canada.

I am accompanied by my colleague, Mr. Thomas Steen, major case director and strategic policy adviser in the fair business practices branch. Mr. Steen established and is responsible for overseeing the bureau's enforcement regime to counter mass marketing fraud, or MMF, which we're here to discuss today. We're also very pleased to be here today with our partner, the Royal Canadian Mounted Police, which is represented by Superintendent Cormier and Inspector Miller.

I will begin my remarks by describing the mandate and role of the Competition Bureau. Then I will discuss our enforcement work to combat mass marketing fraud. Finally, I will touch upon partnerships that the bureau is involved in that help strengthen enforcement initiatives in the area of mass marketing fraud.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace. Headed by the Commissioner of Competition, the bureau is responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act (except as it relates to food), the Textile Labelling Act and the Precious Metals Marking Act.

The basic operating assumption of the Competition Bureau is that competition is good for both businesses and consumers.

The bureau will also be responsible for enforcing parts of Canada's anti-spam legislation when that law comes into force on July 1, 2014, together with the Canadian Radio-television and Telecommunications Commission and the Office of the Privacy Commissioner. Through this legislation the bureau will be able to more effectively address false or misleading representations and deceptive marketing practices in the electronic marketplace, including false or misleading sender or subject matter information, electronic messages, and locator information such as URLs and metadata.

The bureau promotes truth in advertising in the marketplace by discouraging deceptive business practices and by encouraging the provision of sufficient information to enable informed consumer choice. False or misleading representations and deceptive marketing practices can have serious economic consequences for Canadians, especially when directed towards large audiences or when they take place over a long period of time. They can affect both consumers and businesses that are engaging in honest promotional efforts.

The Competition Act contains criminal and civil provisions to address false or misleading representations and deceptive marketing practices in promoting the supply or use of a product or any business interest. Under the criminal provisions, the general provision prohibits all materially false or misleading representations made knowingly or recklessly. Other provisions specifically prohibit deceptive telemarketing, deceptive notices of winning a prize, double ticketing, and schemes of pyramid selling.

Identify theft, as the RCMP has described it, refers to the preparatory stage of acquiring and collecting someone else's personal information for criminal purposes. There are several Criminal Code provisions that address fraudulent conduct. The Competition Bureau's mandate in the mass marketing fraud realm relates to conduct that affects competition and to ensuring consumers have the information required to make informed purchasing decisions. Offences such as identity theft and frauds where no product or business interest are promoted do not fall under the bureau's mandate.

Mass marketing fraud is fraud committed via mass communication media using the Internet, the mail, or the telephone. Costing the Canadian economy $10 billion per year, it is an increasingly global criminal threat.

It has a substantial negative effect on economies and markets by undermining consumer trust and confidence in legitimate businesses. Large-scale criminal mass marketing fraud operations are present in Canada and other countries around the world.

Operators of mass marketing fraud schemes are highly adaptive, rapidly changing their methods and techniques to reduce the risks of law enforcement detection and investigation and to respond to consumer and business awareness of their current methods.

Identity theft and money laundering continue to be critical components of various mass marketing fraud schemes. Law enforcement agencies are witnessing an increasing exploitation of fraud victims to receive and launder victim funds or to receive and disburse counterfeit financial instruments. While most mass marketing fraud schemes are non-violent in nature, law enforcement intelligence indicates that some groups that engage in fraud employ threats and coercive tactics against uncooperative victims, rival groups, and their own group members.

The bureau often investigates large-scale mass marketing fraud crimes which have resulted in consumer losses of up to $500 million. The types of MMF cases that the bureau investigates include: scams targeting small and medium-sized businesses, such as directory and office supply scams; digital economy cases in which important information is buried in the terms and conditions; job opportunity scams; and health-related scams.

To effectively counter the threat of mass marketing fraud, investigative law enforcement and regulatory authorities in multiple countries have been: working together to gather and share intelligence on MMF schemes and how to disrupt them; increasing public awareness and education programs to help individuals and businesses recognize these schemes and avoid losses; developing measures to more promptly identify and support victims of mass marketing fraud schemes; and developing and expanding coordinated efforts among law enforcement agencies to fight MMF schemes.

To illustrate our collaboration, the bureau is a member of the International Mass-Marketing Fraud Working Group and the International Consumer Protection and Enforcement Network.

The bureau also plays a central role in the seven MMF Canada-U.S. law enforcement partnerships across the country of which the bureau is a founding member. Established in the 1990s to combat deceptive telemarketing, these partnerships now include Canadian and U.S. law enforcement agencies that work together to enforce laws dealing with mass marketing fraud. This collaboration has resulted in hundreds of investigations, prosecutions, and convictions.

The Canadian Anti-Fraud Centre, which the bureau jointly manages along with the RCMP and the Ontario Provincial Police, is the hub of the national network of MMF partnerships. It provides intelligence and complainant information to law enforcement partners on a wide range of MMF crimes.

In addition, the CAFC, along with the bureau and the bureau's law enforcement and private sector partners, educates consumers on how to recognize, report, and stop various forms of MMF. In fact, the partners collectively promote fraud awareness during fraud prevention month, which takes place in March.

In conclusion, Madam Chair and members of the committee, I would like to thank you for the opportunity to be here today and to speak about the work the bureau is doing to combat mass marketing fraud. We recognize that this is a global problem and accordingly one that requires a coordinated approach. The bureau will continue to work together with law enforcement agencies across the globe to defend consumers against this threat.

Thank you. We look forward to your questions.

[The Vice-Chair, Conservative, Patricia Davidson]

Thank you very much to our presenters this morning.

We will go to our first round of questioning, of seven minutes including the questions and the answers. I hope I won't have to cut anybody off, but I'll give you a bit of notice if you're getting to the end of the seven minutes and still have more to reply to the question.

We'll start with Mr. Ravignat from the NDP, please.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Madam Vice-Chair.

My thanks to the witnesses for joining us today. Good morning; it is nice to have you with us.

I do not know if you are aware, but my party, the NDP, has introduced Bill C-475 and Bill C-580, which are designed to strengthen the legislation that deals with the privacy of Canadians. The bills offer a solution to the fact that, legally, Canada is significantly behind the times in this digital age.

My question is more general in nature.

As a national police force, the RCMP has as part of its mission to ensure that the law is obeyed. Do you believe that Canada is adequately equipped at present to combat identity theft? Is the legal framework tough enough to help you in your work?

[Supt Jean Cormier]

As I stated during my opening remarks, obviously the Government of Canada has recognized the growing problem with identity theft, and some new laws have been implemented to address it. Any new tools or new legislation that may be put in place to improve the tools that are available to law enforcement to combat identity theft would certainly be a welcome addition. I believe that Canada has an effective and efficient system, but as I stated, there's always room for improved tools for our tool box.

[Mathieu Ravignat, NDP, Pontiac, QC]

Aside from the CAFC, what measures does the RCMP have at its disposal in the fight against identity theft and fraud?

[Supt Jean Cormier]

Madam Chair, this might be a long-winded answer, because there are a number of initiatives that we undertake. I can list some of them. If I go over the time limit, you can advise me accordingly.

The RCMP is committed to Canadian safety and security, obviously. We have a number of initiatives, and I'm going to list a few.

In 2012 the RCMP developed its national identity crime strategy. The strategy is supported by three pillars: education and prevention, intelligence enforcement, and prosecution. The strategy calls for the following: identifying priorities and emerging risk, and so analyzing developing trends; relying on the compilation and analysis generated by the criminal intelligence pillar; increasing the intelligence-based investigation project and coordinated disruption efforts; and developing a standard approach for ID fraud as well, and thus to investigations, including creating and adopting a protocol for multi-jurisdictional investigation, because as I said, many times this crime crosses borders.

[Mathieu Ravignat, NDP, Pontiac, QC]

Allow me to interrupt you. What you are saying is interesting, but I would like to know what stage you are at in developing those standards.

[Supt Jean Cormier]

The strategy was just implemented last year, and we are working with private and public sector partners right now to implement these.

[Mathieu Ravignat, NDP, Pontiac, QC]

You can continue if you have anything to add.

[Supt Jean Cormier]

We're also developing strong partnerships in which we work together to develop or implement the strategy along with public and private sector participants, reaching across the federal and provincial boundaries and involving provincial and municipal law enforcement as well as other entities. We're raising identity crime awareness with the judicial community and government officials from across the country and in other countries.

As stated by my friend in his opening remarks, a component of fraud prevention month, which was the month of March, focused on identity theft.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you.

Could you send us copies of your notes so that we can speed the process up?

I would like to ask one last question. Do I have time, Madam Chair?

[The Vice-Chair, Conservative, Patricia Davidson]

Yes.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay.

We recently learned that, in 2013, the RCMP reported to the Office of the Privacy Commissioner a mere 26% of the cases in which personal information was compromised. In the previous 10 years, only 4% of cases were reported.

There must be a reason for that. I am wondering why your organization does not systematically report all cases in which personal information is compromised.

[Supt Jean Cormier]

I do not know if I can answer your question precisely. Essentially, we continue to identify cases of identity theft. The number of cases is actually going down, but the amount of information involved is increasing.

[Mathieu Ravignat, NDP, Pontiac, QC]

That does not quite answer my question.

According to the Office of the Privacy Commissioner, the RCMP reports only some cases of breaches of privacy. That is a problem, and I do not know why it is so.

[Supt Jean Cormier]

In order to check that information, I would have to compare my notes with my partners at the Competition Bureau.

I don't know. I'm saying that maybe I should—

[The Vice-Chair, Conservative, Patricia Davidson]

I'm going to interrupt you here. Maybe we can come back to this during someone else's questioning. The time is at an end here.

[Mathieu Ravignat, NDP, Pontiac, QC]

Sure.

That's fair. If you can send that information along to us, that would be great.

[The Vice-Chair, Conservative, Patricia Davidson]

If you do have information to send, send it in care of the clerk. Then it will be circulated to the entire committee.

For our second questioner, we'll go to Mr. Hawn, please, for seven minutes.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Thank you all for being here.

I'd suggest that probably the RCMP applies some judgment. You get all these breaches. I assume you look at them and apply some judgment in deciding which ones are worthy of forwarding on and so on. Would that be a fair statement?

[Supt Jean Cormier]

That would be a fair statement. We would likely report to the Competition Bureau what is relevant to the Competition Bureau.

[Laurie Hawn, Conservative, Edmonton Centre, AB]

Sure.

Mr. Currie, you talked about being part of various international organizations. I presume that you share best practices and so on. Is there somebody out there who has best practices that we haven't perhaps yet learned from or haven't yet implemented? Is there anybody out there we should be learning more from?