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Backgrounder: Identity Theft

Distinction between Identity Theft and Identity Fraud

While the term "identity theft" has no universal definition, it can refer to the preliminary steps of collecting, possessing, and trafficking in identity information for the purpose of eventual use in crimes such as personation, fraud or misuse of debit card or credit card data. Identity theft in this sense can be contrasted with "identity fraud", i.e., the subsequent actual deceptive use of the identity information of another person in connection with various crimes. Identity theft therefore takes place in advance of and in preparation for identity fraud.

New Model of Crime

Canadian and U.S. law enforcement agencies have seen a growing trend in both countries towards greater use of identity theft as a means of furthering or facilitating other types of crime, from fraud to organized criminal activity to terrorism.

Also, instead of one person committing an offence, there may be a complex operation involving a number of different people. No one person may be individually responsible for committing an offence, but each may contribute a small part to the larger criminal operation. New legislation on identity theft will give police and prosecutors additional tools to address such complex criminal activities.

Scale of the problem

One incident of identity fraud may have many victims, from the person whose identity is stolen and whose credit rating and reputation may be damaged, to the commercial and financial institutions that may cover losses resulting from use of stolen information, to the Canadian taxpayer, who may be harmed when false identities are used to obtain government documents or benefits.

It is difficult to determine an accurate number of victims of identity theft or identity fraud because they are not always reported, and when they are, they may be reported to a number of different authorities or organizations. However, a November 2006 Ipsos-Reid survey indicated that 73 per cent of Canadians are concerned about becoming victims of identity theft, and 28 per cent say they or someone they know has already been a victim of identity theft.

Identity theft is a serious criminal activity that has become more lucrative than ever before and one that easily crosses borders. In 2006, almost 8000 victims reported losses of $16 million to PhoneBusters, the Canadian Anti-fraud Call Centre. Many more cases are thought to go unreported. The Canadian Council of Better Business Bureaus has estimated that identity theft may cost Canadian consumers, banks and credit card firms, stores and other businesses more than $2 billion annually.

Proposed amendments to the Criminal Code

Three new "core" offences would be created, all subject to 5-year maximum sentences:

obtaining and possessing identity information with the intent to use the information deceptively, dishonestly or fraudulently in the commission of a crime;
trafficking in identity information, an offence that targets those who transfer or sell information to another person with knowledge of or recklessness as to the possible criminal use of the information;
unlawfully possessing or trafficking in government-issued identity documents that contain information of another person.

Additional Criminal Code amendments include:

creating a new offence of fraudulently redirecting or causing redirection of a person‘s mail;
creating a new offence of possessing a counterfeit Canada Post mail key;
creating complementary forgery offences such as trafficking in forged documents, or possessing forged documents with the intent to use them;
enaming the offence of personation to "identity fraud";
clarifying the meaning of "personating a person"; and
adding the offence of possession of instruments for copying credit card information, in addition to the existing offence of possessing instruments for forging credit cards.

Moreover, a new power would also be added permitting the court to order, as part of a sentence, that an offender be required to pay restitution to a victim of identity theft or identity fraud where the victim has incurred expenses related to rehabilitating their identity, such as the cost of replacement cards and documents and costs in relation to correcting their credit history.

Exemptions

Proposals for identity theft legislation give rise to concerns about the potential negative impacts they could have on undercover work by law enforcement and national security agencies, in the course of which false identities and false documents are used. The legislation, as introduced, includes two exemptions to ensure that document issuers who make false documents for covert government operations can do so without fear of prosecution for forgery, and to ensure that public officers (i.e., law enforcement personnel) can create and use covert identities in furtherance of their duties.

Relationship with Private Member’s Bill C-299

Private Members’ Bill C-299, An Act to amend the Criminal Code (identification information obtained by fraud or false pretence) seeks to address one part of the problem of identity theft. The proposed government legislation will improve upon Private Members‘ Bill C-299 by providing a more comprehensive approach to the problem of identity theft.