Email to Mr. James Daw, The Toronto Star

Other Findings
The Oudovikine's have all the relevant privacy documents in excruciating detail.

The following agencies have active files on this situation: Ombudsman for Banking Services and Investments, Financial Consumer Agency of Canada, Office of the Superintendent of Financial Institutions, Minster of Finance, Industry Canada (Small Business Administration), and Ontario Provincial Police, Anti-Rackets Squad. On February 25, 2005, I submitted a paper to Industry Canada regarding predatory lending practices in the franchise industry called Franchising Opportunism.

We'd be happy to talk to the Star about this.

Email to Mr. James Daw, The Toronto Star

To: Mr. James Daw, The Toronto Star
From: Mr. Les Stewart, Canadian Alliance of Franchise Operators
Date: May 3, 2005

Dear Jim,

I think I have happened across an issue that has fairly wide implications for anyone who has an account at a Canadian financial institution.

It appears that the banks have an informal policy of ignoring all privacy complaints and only acknowledging the ones brought forward through the media. This runs directly counter to federal privacy laws.

Background
I have been working with a father and son franchisee team, Alex and Andrei Oudovikine, since last summer trying to solve their business problems. They currently operate a Country Style store in Markham since October 2003.

After following the Canadian Imperial Bank of Commerce, CIBC's complaint process for eight months, they have had their complaint in front of the Ombudsman for Banking Services and Investments, OBSI, for 3.5 months. All senior CIBC officials have refused to meet with the Oudovikine's.

While we were initially looking at the bank's responsibilities under the Canada Small Business Financing Act and the Bank Act (due diligence, lending duty, unauthorized transfer of +$300,000, etc.), the greatest issue may prove to be CIBC's violations of the Personal Information Protection and Electronic Documents Act, PIPEDA.

Alex, Ph. D. is running the store while Andrei, P. Eng. is employed full-time as a computer consultant with TD Securities and previously worked in banking information systems for nine years. They and their families emigrated from Russia in 1996 and have become citizens in 2004.

Andrei had an interview with a TD lawyer yesterday. He said senior executives of all the banks have decided to deny all privacy violations unless forced to by being confronted by the media with documentary evidence. All legal departments are to turn a blind eye.

PIPEDA
The Office of the Privacy Commissioner of Canada administers the Act and has three active files on Oudovikine's situation. Within 24 hours of being made aware of a significant security breach, all financial institutions must report to their customers and re-establish security (i.e. change access codes, to at no cost, etc.). The Privacy Commissioner's report on the CIBC's misdirected facsimiles can be found at: http://www.privcom.gc.ca/incidents/2005/050418_01_e.asp Their greatest criticism was that CIBC did not inform their customers.

Oudovikine Incident 1
Andrei made a document request at a CIBC branch at 100 University Avenue on October 29, 2004 for his account history from December 2, 2002 to October 1, 2004.

In the third week of February 2005, he went to the branch and picked up an envelope that contained instead financial information concerning his and over 100 other CIBC customers from the same timeframe (Branch History Report).

The information included: customer name, account number, financial transaction details (e.g. deposits, withdrawals, interest), average balance, forwarded balance, final balance, and interest occurred. This is much, much more sensitive than the misdirected faxes.

On February 23, 2005, Andrei forwarded the documents along to Ms. Gawman of the Privacy Commissioner's Office (see attached file).

The following CIBC officials were immediately notified: Mr. John Hunkin, President and CEO, Ms. Joanne MacLeod, Senior Manager, Director's Office, Customer Care, and Mr. Ron Lalonde, Senior Executive Vice-President, Chief Administrative Officer and Chief Privacy Officer.

As of May 2, 2005 none of the CIBC clients (Andrei included) have been contacted by CIBC and notified about the fact that their private financial information has been compromised, No one has been advised to verify the integrity of their accounts and to change account credentials (PIN, card number, account number, etc).

Oudovikine Incident 2
On April 13, 2005, an unauthorized withdrawal was made from Andrei's CIBC chequing account that resulted in CIBC Security freezing of all of his accounts (including VISA and credit line). He was told that he had to sign a general waiver of legal rights as a condition of re-opening his accounts. Andrei declined to sign and, when he said he would like to seek legal advice, had his accounts re-activated within 24 hours.

Andrei suspects that this unauthorized withdrawal of funds might be related to Incident 1. There is no way to say if someone else got a copy of this Branch History Report and was using this information for their own criminal intent. Andrei was and still is in very real physical and legal danger because of CIBC's negligence.

For over 2 months, CIBC has chosen not to disclose this very real financial risk to the other 100 customers.

This is in direct violation of PIPEDA and, presumably, Hunkin's written remediation agreement with the Office of the Privacy Commission of Canada concerning privacy violations.

Privacy Conclusion
Notwithstanding a five-year-old federal law to the contrary, it appears that financial institutions will only notify their customers when the threat of publication is present. Perhaps they feel that (1) hyper-sensitive internal account vigilance and (2) confidential, one-off settlements are less costly than the reputation risks if the public knew the true insecurity of their financial information.

It appears the banks prefer to increase their customers' financial risk rather than plug their very leaky data boat. They appear to be acting as if they were above the law.

Other Findings
The Oudovikine's have all the relevant privacy documents in excruciating detail.

The following agencies have active files on this situation: Ombudsman for Banking Services and Investments, Financial Consumer Agency of Canada, Office of the Superintendent of Financial Institutions, Minster of Finance, Industry Canada (Small Business Administration), and Ontario Provincial Police, Anti-Rackets Squad. On February 25, 2005, I submitted a paper to Industry Canada regarding predatory lending practices in the franchise industry called Franchising Opportunism.

We'd be happy to talk to the Star about this.

Les Stewart
Canadian Alliance of Franchise Operators
705-737-4635 Tel
ten.ofac|trawets.sel#ten.ofac|trawets.sel

Andrei Oudovikine
416-219-6576 Tel
moc.seitirucesdt|enikivoduO.ierdnA#moc.seitirucesdt|enikivoduO.ierdnA


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