New Ontario Legislation Places Regulations on Fraud Alerts Sheila McCracken, VP Intersections and CGAT board member

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1 New Ontario Legislation Places Regulations on Fraud Alerts Sheila McCracken, VP Intersections and CGAT board member WHILE consumers have long had fraud alerts available as a means of protecting their credit from theft, an amendment to Ontario Credit Reporting legislation Bill C-152 now places regulations on fraud alerts. The new law, enacted in January 2008, contains the following components: Consumers may request an alert to be placed with a credit reporting agency (CRA) without providing documentation that a fraud attempt has occurred as previously required by the CRAs. The CRAs may charge $5 for fraud alerts to be placed. There is to be no charge to remove a fraud alert. Credit grantors must make reasonable efforts to confirm a person s identity if their credit file is tagged with a fraud alert.../continued on page 3 Fraud Alerts what they are; how they work A fraud alert is a warning flag placed on an individual s credit file at each of the credit reporting agencies (CRA) Equifax Canada, TransUnion Canada, and Experian. Creditors are directed to use reasonable procedures to verify a person s identity prior to issuing credit. Fraud alerts may be extended in increments of 90 days, as well as removed, by writing directly to the CRAs. Fraud Alerts when and why to use them A fraud alert should be used as a defensive action when someone has either already become a victim of identity theft, or has logical reason to believe they will become a victim (if, for example, a wallet has been lost or stolen). Then, if a thief attempts to open new accounts that require a credit check, creditors are supposed to verify the applicant s identity prior to issuing credit. This Issue: New Ontario Legislation Places Regulations on Fraud Alerts P. 1 Board of Directors P. 2 Message from the President P. 2 How Do Thieves Steal an Identity? P. 4 In Memoriam P. 5 New Board Members P. 5 Debt is Manageable P. 6 Let s Talk About Fraud P. 7 Did You Know? P. 7 Upcoming Dinner P. 8 UPCOMING EVENTS CAGT and DRN Commerce present An Evening with David Chilton Wednesday, May 14, 2008 The author of Canada s all-time bestselling book, The Wealthy Barber, has returned to speaking after a five-year absence. Credit Association of Greater Toronto - May 2008

2 CAGT Board of Directors for 2008/2009 President KATHY MILNE Past President LANCE PATTEN President NuComm Credit Services Inc. 2nd Vice President MUKESH DAJI Director, Business Development Freedom 55 Financial Treasurer KEVIN S. KLAYMAN Barrister and Solicitor Gasee, Cohen and Youngman Secretary KATHY MILNE Membership Committee BRAD McFATER - Chair National Account Executive TransUnion of Canada, Inc. Logistics Committee JOHN KIM - Chair Executive Vice President Credit Bureau of Canada Collections Communications Committee SHEILA McCRACKEN - Chair Vice President Intersections Inc. FRANK ZITO Assistant Vice President Alliance One KATHY MILNE Professional Development Committee MUKESH DAJI - Chair Director, Business Development Freedom 55 Financial Program Committee BRIAN A. CHERRY President A-1 Credit Recovery & Collection Services Inc. DEBORAH HOEFENMAYER Sr. Business Development Manager Payment Services Western Union VANESSA GIULIANI Consultant Equifax Canada ELENA JARA Education Co-Ordinator Credit Canada Scholarship Committee JOHN KIM - Chair Executive Vice President Credit Bureau of Canada Collections LANCE PATTEN President NuComm Credit Services Inc. Executive Assistant to the CAGT ZITA PINTO Equifax Canada Logistic Assistant to the CAGT THERESA WOJTASIEWICZ Message from the President: Dear Members: Ahhhhhhhhhh..Spring!!! It s been a long time coming and many of you are looking forward to enjoying sun filled days with family and friends and embracing the season ahead. We at the CAGT are no different as we launch new initiatives and prepare to present several interesting speakers. Our 2008 dinner meetings have been a huge success so far this year. We have been fortunate to have Derek Holt, Assistant Chief Economist with RBC, Identity Fraud: Trends and Solutions panel Vanessa Giuliani, Fraud Consultant for Equifax Canada, Kolin Whitley, VP Fraud Solutions for TransUnion Canada, Jason Paguandes, Lead Consultant in Fair Isaac s Global Fraud Consulting Group and Laurie Campbell, Executive Director of Credit Canada. As we near the end of our dinner event series, what better way to send you off into the summer than with memories of our final dinner of the season, our May Gala Event. This year, we are excited, thrilled and fortunate enough to engage none other than DAVID CHILTON. The author of Canada s all-time bestselling book, The Wealthy Barber, has returned to speaking after a five-year absence. For close to a decade Chilton was among the most sought-after speakers in North America. His unique combination of knowledge and humour About Us News & Views is a publication of the Credit Association of Greater Toronto (CAGT) and is mailed three times a year. Please circulate this newsletter. Kathy Milne, President To submit an article or your comments, contact Sheila McCracken at: or info@cagt.ca. To receive extra copies of News & Views, helped to take the intimidation and dryness out of financial planning. Please join us and celebrate the amusing side of our business. It s sure to be an evening to remember and is brought to you through the sponsorship of several of our members. DRN Commerce is our co-sponsor once again this year, as well we have gold sponsors Techcomm and Pheonix Capital, silver sponsors Asset and The Richmond Group of Companies, and bronze sponsors Equifax and TransUnion. Today, more than ever, the success of our meetings relies heavily on the strength of program content and presentation. That s because speakers do more than just convey the overall meeting message. We look to them to provide insights, awareness, and cutting-edge information in an energetic, motivational, entertaining, and professional manner. We do our best to consider the needs of our audience and appreciate your comments and suggestions. Please continue to share and distribute our newsletter and information flyers throughout your organizations. Your feedback is essential to ensuring that we communicate what you want to hear. Warmest wishes for the summer season ahead. Sincerely, Kathy Milne, President contact Zita Pinto at: For membership information, contact Brad McFater at: Credit Association of Greater Toronto - May

3 Fraud Alerts / continued from page 1 Fraud Alerts: A helpful but incomplete solution While a potentially effective device in preventing some new credit-related accounts from being opened, fraud alerts do not address many of the risks that could give rise to identity fraud. A consumer who believes that he or she is safe merely because of a fraud alert may be lulled into a false sense of security. Services that charge a consumer specifically to place fraud alerts may be trading on the misperception that a fraud alert is a complete remedy. Fraud alerts do not require a consistent response by creditors. Because the law is unspecific, one creditor s definition of validating an identity may be different from another s. Until the actions to be taken are consistent, required, and enforced, there is no guarantee a consumer s identity will be accurately confirmed. Fraud alerts do not protect against existing account takeover. One of the most common methods of identity theft is the takeover of existing accounts. Thieves gain access to existing accounts, change the contact information, and proceed A fraud alert should be used as a defensive action when someone has either already become a victim of identity theft, or has logical reason to believe they will become a victim. to use the account for unauthorized purchases, racking up charges the consumer may ultimately be responsible for not to mention the arduous task of reclaiming their identity. A fraud alert will not provide protection if an identity thief is using existing credit cards or other types of accounts. It only applies to new credit-related requests. So, with fraud alerts alone, the consumer s protection against credit fraud is vastly incomplete. Fraud alerts do not protect non-credit related personal information which may be used to commit identity fraud. A significant number of reported identity theft cases are types that don t appear in credit reports such as employment fraud and medical benefit fraud. Fraud alerts will not prevent thieves from stealing non-credit account information. Public records, such as licenses, utilities, and court records are not covered by fraud alerts. Identity theft can and often does occur when identity thieves obtain and use public and unprotected information. Fraud alerts do not protect chequing accounts, debit cards, and the potential theft associated with those. A fraud alert placed on one s file at the CRAs will not protect a debit card from, for example, spying eyes at an ATM. Once intercepted, with some additional pieces of personal information, an identity thief could change the address on an account and proceed to steal one s money and identity. Over usage could render fraud alerts ineffective. The proliferation of fraud alerts being used as a proactive tool has the potential to overwhelm creditors with requests and ultimately dilute the original intent and purpose. Creditors may become unable to effectively verify all of the requests they receive, thus opening the door to ignoring the alerts altogether. Valid credit offers may be denied. A fraud alert may inadvertently 3 Credit Association of Greater Toronto - May 2008

4 How do thieves 1 steal an identity? Identity theft starts with the misuse of your personally identifying information such as your name and Social Security number, credit card numbers, or other financial account information. For identity thieves, this information is as good as gold. Skilled identity thieves may use a variety of methods to get hold of your information, including: Dumpster Diving. They rummage through trash looking for bills or other paper with your personal information on it. Skimming. They steal credit/debit card numbers by using a special storage device when processing your card. Phishing. They pretend to be financial institutions or companies and send spam or pop-up messages to get you to reveal your personal information. Changing Your Address. They divert your billing statements to another location by completing a change of address form. Old-Fashioned Stealing. They steal wallets and purses; mail, including bank and credit card statements; pre-approved credit offers; and new checks or tax information. They steal personnel records, or bribe employees who have access. Pretexting. They use false pretenses to obtain your personal information from financial institutions, telephone companies, and other sources. impede access to valuable credit offers resulting in the consumer losing out on potential savings. Creditors frequently use Voice Response Units (VRUs) to verify one s identity. Live representatives are not typically available. For example, a consumer wants to take advantage of an instant, low- or no-interest in-store credit offer for a big-ticket item, such as a big-screen television or a personal computer. The offer could yield hundreds of dollars in savings, but because there is a fraud alert on the credit file, the creditor has attempted to call to verify the identity typically on the home phone and credit is denied because the consumer cannot be reached. Monitoring: A necessary, proactive component of any solution When used appropriately, fraud alerts can be a valuable tool to prevent additional identity theft. However, they were not developed, nor should they be used, as a proactive or stand-alone method to help consumers protect themselves from this crime. More effective is a combination of the following components: Monitoring and alerts of credit file changes at each of the CRAs. Credit files are monitored daily for certain types of activities associated with identity theft. Types of activities could include change of address, new accounts being opened, and inquiries into credit files. Once detected, an alert is sent directly to the 1 consumer notifying him or her of the activity. Credit reports and scores. While everyone can obtain a free copy of their credit report each year from the CRAs, it s best to routinely check one s credit reports for accuracy and activity along with credit scores and score changes which aren t included with the free credit reports. Internet Surveillance. With Internet surveillance, sophisticated technology is used to constantly monitor the Web for evidence that personal information such as registered credit card and debit card account numbers is being bought, sold, or traded. Once detected, alerts give the consumer the opportunity to stop identity theft before it happens. No one can completely prevent or promise to prevent identity theft from occurring. However, consumers have options to protect and inform themselves, with fraud alerts as just one item in their identity theft protection toolkit. Consumers should also consider using a comprehensive service that can help them deal with all aspects of fraud including education, prevention, detection, and resolution. Credit Association of Greater Toronto - May

5 In Memoriam: Paul Moraes (June 29, April 10, 2008) IT is with profound sadness and deep sorrow that we announce the passing of Paul Moraes, (Pauly), in his 58th year, on Thursday, April 10, 2008, at his home in Nobleton, Ontario, surrounded by the loving family that he adored. Pauly, as he was known to his close friends, was greatly loved by his devoted wife, Audrey, his adoring children, Tiffany, Ashley and Devaney as well as an admiring and enormous extended family. Paul will be remembered as a man of character, known for his integrity and generosity not to mention his unfailing humility given his many achievements. Professionally, Paul achieved much through his storied careers. Paul was a Chartered Accountant (CA) by designation but most importantly he was an inspiring C.E.O./owner to his extended family at NCN. Paul was always the perfect gentleman, who always thought of others before himself. Those that had the pleasure of his company would remember his simple hello and be touched by his genuine interest in their lives. Paul battled cancer like he approached life, with courage and dignity. His family and friends, while we mourn his passing, are thankful and blessed for having been able to share in his life. Paul s career experiences started in land surveying, both in his homeland of Uganda and once again in Woodstock Ontario. From there Paul earned his Chartered Accountant (CA) designation while articling at Deloittes, eventually moving on to various finance positions in the manufacturing and transportation industries. Paul s collection industry career commenced in 1983 with CBCL with stops along the way with Total Credit Recovery and Equifax, with a respite at Livent Entertainment in In 2000, Paul was sought out to take a leadership role, as President & CEO, with Nor-Don Collection Network Inc. ( NCN ), a Canadian collection agency with operations across Canada. Paul became the driving force as NCN grew into a premier provider of collection services in Canada. Paul s passing has left a void with his friends and colleagues at NCN and in the industry, however his inspiration and spirit for his company continues to thrive in his memory. New CAGT Board Members PLEASE join us in welcoming our two new board members. VANESSA GIULIANI Program Committee Member Vanessa joined the CAGT Board of Directors as a member of the Program Committee at our Annual General Meeting in March, Vanessa is a Consultant at Equifax specializing in fraud strategy and fraud product development. Prior to joining Equifax, Vanessa worked with the Canadian Imperial Bank of Commerce and the Bank of Montreal where she specialized in internal audit and corporate security, credit and operational risk management, business integration management and fraud strategy. Vanessa is a graduate of Queens University, where she received an Honours Bachelor of Arts Degree. Vanessa Giulani can be reached at: (416) vanessa.giuliani@equifax.com ELENA JARA Program Committee Member Elena joined the CAGT Board of Directors as a member of the Program Committee at our Annual General Meeting in March, Elena Jara is the Education Coordinator for Credit Canada. She has been with Credit Canada for 16 years and has held many different positions throughout this time. Elena received a Bachelors degree from York University and her Bankruptcy Insolvency Certificate from Ryerson University. She is credited for helping coordinate Credit Education Week Canada, 2007 where she helped develop the Credit Education Week Canada website. Elena has appeared on Global TV, CTV, and has been featured in the Toronto Star, The Globe & Mail and The Toronto Sun. Elena Jara can be reached at: (416) ejara@creditcanada.com 5 Credit Association of Greater Toronto - May 2008

6 Debt is Manageable Elena Jara, Education Co-ordinator for Credit Canada and board member of CGAT IN today s economy, with record debt loads and savings at an all time low, credit counselling is an important component for your company s success. Employees and customers alike are experiencing the overburdened responsibility of too much debt. No doubt in your collection activities, you are hearing more and more individuals who are not able to make payments to you due to the mere fact they have several other creditors also demanding payments to them. Ideally you want to be paid first but realistically, as a savvy business person, you are aware that this is a bandage approach which may work for one month but is not a long term solution to the recovery of the debt outstanding to you. This is where a not for profit, charitable credit counselling agency can be an effective and successful business solution to you and your customers. Unfortunately, many people caught in a spiraling cycle of debt turn to a trustee in bankruptcy to resolve their financial dilemma as they see no way of being able to deal with the insurmountable financial burden they are carrying. Credit counselling provides invaluable options to those individuals with nowhere else to turn. Your employee or customer can sit face to face with a counsellor to review their full financial situation and provide a comprehensive budget to determine how they can get out of debt and avoid bankruptcy. Accredited credit counselling agencies have counsellors who are well trained in the area of debt resolution, money management and financial goal setting so that individuals can look toward a positive financial future. Credit counselling agencies need you as a creditor to support and accept debt repayment programs and encourage your employees and customers who are in serious financial dilemma to use our services. Evidence shows that when an individual is bankrupt, creditors get less than 10% in dividends on the outstanding amounts. If they opt for a consumer proposal, the creditor will be fortunate if they net 25% in dividends on the outstanding debt. With credit counselling, individuals repay 100% of the principal amount outstanding. It is obviously good business sense to accept credit counselling based on this information. At the end of the debt management program, which can take up to four years, your customer is now a well educated consumer in the areas of financial literacy and money management. The rate of relapse with bankruptcy and consumer proposal is 10% while the rate of recidivism with credit counselling is less than one percent. One key area of concern that still remains is the way a successful credit counselling client is notated on the credit bureau. Currently, the information stays on file for two years after they have completed 100% of their debt management program. A consumer proposal stays on file for three years, whereby they pay a mere fraction of the debt. For many faced with the decision of working a debt repayment program, it appears that credit counselling clients are being penalized for making every effort to pay that full amount. Consequently, we need you as a creditor to take a stand and help us change the length of time successful credit counselling clients are reported at the credit bureau. This will result in more people who may otherwise opt for a consumer proposal or a bankruptcy than to choose a debt management program through credit counselling instead. Bottom line this is good for your business. At Credit Canada we appreciate the continued support of the credit granting community to help us in our mission to help individuals with credit education, mediation and prevention of debt so they can be a financial success. For more information on how we can be part of your business success please contact our Education Department for education material or for a Lunch and Learn Seminar. Jonathan Smith, CIBC Collections Credit Association of Greater Toronto - May

7 Let s Talk About Fraud Did You Know? Our members said that fraud is a high priority and the CAGT delivered. At our March dinner meeting, Vanessa Giuliani of Equifax, Kolin Whitley of TransUnion and Jason Paguandes of Fair Isaac joined forces to form a panel on the topic of fraud. A strong member turnout from all industries proved how cross-cutting this topic is, what a high priority it is for our membership and that fraud always draws a strong crowd. The panel met in advance to synchronize efforts and ensure the maximum number of fraud related topics could be covered. Topics included recent trends in identity fraud, the increase in fictitious identities, expected trends through chip migration and beyond, customer authentication tools, recent laws and regulations and fraud prevention techniques. The crowd was highly engaged by the panel and interacted with them at the conclusion of their presentation. Feedback on the presentations was very favourable and underscored the importance of this topic to our membership. Because of the dynamic nature of fraud and with the level of sophistication on the rise, the CAGT will continue to incorporate this exciting topic into future member events and bring you expert perspectives from across the industry. Thanks again to Vanessa, Kolin and Jason for the exciting panel discussion on fraud. The silhouette on the NBA logo is Jerry West. Carbonated water, with nothing else in it, can dissolve limestone, talc, and many other low-moh s hardness minerals. Coincidentally, carbonated water is the main ingredient in soda pop. If you toss a penny 10,000 times, it will not be heads 5,000 times, but more like 4,950. The heads picture weighs more, so it ends up on the bottom. The oldest word in the English language is town. A peanut is not a nut; it is a legume. In 52% of solved cases of identity theft, the victim knew the thief personally. *San Diego Union, 2/6/07 The original creators of Superman, Joe Shuster and Jerry Siegel, sold their rights to the character in 1938 for $130. *New York Times, 3/29/08 L to R: Vanessa Giuliani (Equifax), Kolin Whitey (TransUnion), and Jason Paguandes (Fair Isaac) Become A Member An Indian man lost his life savings when termites invaded his bank s safe deposit box, turning his 682,000 rupees into dust. *Banking Times, 4/7/08 The CAGT is a great resource for education and insight into new trends and ideas in the credit industry. Our members come from all areas of credit, including retailers, banks, finance companies, utilities, collection agencies and credit bureaus. As a CAGT member, your company will benefit from the full spectrum of industry news, information, education and contacts. For more information, visit /membership.htm 7 Credit Association of Greater Toronto - September 2007 *Source: - true substantiated facts

8 CAGT and DRN Commerce present an evening with David Chilton Dave Chilton is back. The author of Canada's all-time bestselling book, The Wealthy Barber, has returned to speaking after a five-year absence. Chilton's speeches aren't about just money. They're about believing in yourself, overcoming mistakes and, most importantly, they're about perspective the missing ingredient in many people's lives. His recipe for success is hard work, a clear vision and some clever marketing. Whether it's helping thousands of Canadians achieve personal financial success or investing in low-fat cookbooks, Chilton has always had a knack for recognizing great ventures from the get-go. DATE: Wednesday, May 14, 2008 TIME: 5:00 pm - 8:30 pm (cocktails - 5:00 pm; dinner - 6:30 pm) LOCATION: Marriott Yorkville 90 Bloor St. East (at Yonge) Forest Hill Ballroom TO REGISTER: 1. Online: 2. By Fax: By Mail: 110 Sheppard Ave. East, Suite 500 Toronto, Ontario, M2N 6SI For more information, please contact Zita Pinto at or zita.pinto@equifax.com OUR SPEAKERS INFORMATION DAVID CHILTON is an economics graduate and has won the prestigious H.L. Gassard Memorial Award for achieving the highest score in the country on the Canadian Securities Course. His forte is taking the intimidation out of financial planning by wrapping it in humour and accessible illustrations. The Wealthy Barber's "novel" format has opened the personal-finance door to hundreds of thousands of Canadian households. Chilton has also hosted two critically acclaimed specials on PBS where the Chicago Sun-Times describes his performance as "charming, unpretentious, and funny." More recently Chilton donned a new hat and published the low-fat cookbooks, Looneyspoons and Crazy Plates. This session is being sponsored by: - DRN Commerce - Techcom - Phoenix Capital - Asset Inc. - The Richmond Group of Companies - Equifax - TransUnion CAGT and DRN Commerce present an evening with David Chilton - Wednesday, May 14, 2008 CAGT Members $95.00 (incl. GST) = $ Non-Members $ (incl. GST) = $ Table for 8 - Members $ (incl. GST) = $ Table for 8 - Non-Members $ (incl. GST) = $ I will mail a cheque I will pay by credit card as noted below Contact Name: Address: Phone: Amex, Visa or MC #: Attendee Name: Address: Phone: Fax: Fax: Make cheque payable to CREDIT ASSOCIATION OF GREATER TORONTO. Registrations must be received by noon, Friday, May 9, Regrettably, we must bill for no shows. Payment may be made by cheque or credit card. Company: City: Expiry: Company: City: Cardholder Signature: Postal Code: Postal Code: Attendees (include , if possible - attach additional sheets if necessary) Credit Association of Greater Toronto - May