Bylaw Battle

Sterns argues in his factum the city would be forcing store owners to breach privacy laws because the stores cannot "explicitly specify" how the personal information may be used by police, nor would all customers be able to give truly voluntary consent.

The Toronto Star
January 23, 2006

Bylaw Battle
Store chain cites privacy threat
James Daw

A second-hand store chain today will challenge an Oshawa bylaw it says discriminates against the poor and imposes an illegal tax. Firm says police need it to help track down thiefs and stolen goods. Cash Converters Canada Inc., a chain of second-hand stores, is going to court today to spare its clients and competitors from what it considers a hidden tax and unwarranted invasion of privacy.

It is fighting amendments to an Oshawa bylaw that would require used-goods shops to send daily electronic reports to police with the photograph and personal information of clients who sold the goods, and to pay a fee for each transaction reported.

The new system would replace an existing requirement to report names and addresses on paper, for which there is no central record- keeping available to all police services.

The case could have implications for stores in other cities, and for software and database provider Business Watch International Inc. of Regina, which works closely with police forces to get similar bylaws into place.

Cash Converters, a 24-store national chain, alleges Durham Regional Police Services will pass customer information to Business Watch, which lets police from across Canada search its database over the Internet, free of charge and without a search warrant.

"We are challenging the bylaw for commercial reasons, but on a personal level I think there are a lot of things in there that everyone should be interested in," says Adrian Armsden, president of Cash Converters. "It is quite intrusive."

Lawyer David Sterns will try to persuade Ontario's Superior Court of Justice that sections of Oshawa's bylaw should be quashed for several reasons.

Sterns argues, in a factum filed with the court in Toronto, that municipalities have no right under the constitution to help police enforce criminal code offences by forcing consumers to provide personal information without probable cause.

He argues municipalities have no authority to collect or require transaction charges from local businesses; that the charges would amount to a hidden tax on the low-income customers who shop for used goods.

He argues in the factum that Oshawa is also discriminating by exempting other businesses such as jewellery stores and camera shops that buy used goods for resale as a sideline.

The lawyer contends that Oshawa has no evidence that pawnshops and used-goods stores are any more likely to receive stolen goods than other retailers exempted from the bylaw.

The bylaw would not apply eBay Inc., the largest online seller of used goods, or publishers that accept classified advertisements, or to wholesalers that might be trafficking in stolen goods.

Finally, Sterns argues that Oshawa is forcing used-goods shops to breach federal and provincial privacy laws. The allegations have yet to be proven in court.

York Region, Edmonton and Medicine Hat have municipal bylaws that require used-goods shops to report customer information that's stored electronically by BWI. Toronto is considering a similar bylaw.

"It is an independent company that will make a fortune out of this," alleges Russell Oliver, a Toronto jeweller and pawnbroker who advertises for used jewellery on television.

"I don't want to ask my customers to pose for a mug shot," he complains about proposals for a Toronto bylaw. "Why do I always need to ask for two or three pieces of ID? Why do I have to ask a customer his weight?"

Oliver expects Toronto will apply a new bylaw to his company, Oliver Jewellers, but not to Henry Birks & Sons Inc., which buys and sells estate jewellery.

BWI's principal shareholder - government-owned Saskatchewan Telecommunications or SaskTel - stated in its 2004 annual report that, "successful execution of BWI's business plan depends partly on legislation to make automated reporting mandatory for the pawn and second-hand industry."

But Tom Millette, president of BWI, says the company will work with the police to get provincial legislation such as in Saskatchewan if the courts over-rule municipal bylaws.

He said court challenges in the United States have failed to overturn municipal ordinances that require shops to pay fees and transmit client information to third-party database providers. Two cities in Michigan require shops to use BWI's system to collect fingerprints.

Business Watch International supplies a complete software package for managing a used-goods shop, including the capability to transmit data for use by police. It also designs stand-alone systems for single police forces.

BWI now charges 50 cents to 75 cents for each transaction reported to the police. Cash Converters is concerned BWI will be free to raise prices if municipalities mandate the use of its system, says Armsden.

The Oshawa bylaw requires shop owners to pay up to $1 per transaction, which local Cash Converters franchisees Danny and Tammy Nigris estimate would cost about $8,613 a year at the level of transactions they had in 2003. That year police seized only $1,200 of its goods in connection with an investigation.

Millette said that many used-goods shops pay voluntarily to have his company to transmit data to the police

"Between 50 and 75 per cent of pawnshops in Calgary are on our system voluntarily," said Millette. "We have Cash Converters stores that use our software voluntarily."

Stern will face off with lawyers for the City of Oshawa in a Toronto courtroom today. A lawyer for the Ministry of the Attorney General will appear in support of Oshawa's bylaw.

It's doubtful the court will issue a ruling immediately. Armsden predicts the case could eventually end up in the Supreme Court of Canada, regardless of the outcome in Superior Court.

Oshawa would require used-goods stores to demand three pieces of federal or provincial identification. Cash Converters says many potential customers wanting to sell goods could not meet that requirement.

A used-goods shop would have to take a copy of one piece of photo ID for transmission to the police. It would also have to record the customer's name, gender, date of birth, address, telephone number and approximate height.

Sterns argues in his factum the city would be forcing store owners to breach privacy laws because the stores cannot "explicitly specify" how the personal information may be used by police, nor would all customers be able to give truly voluntary consent.

"The customer who is compelled to sell goods in order to buy necessities of life has no alternative but to 'consent'," Sterns argues. "His consent is not voluntary if he needs money to survive."

BWI officials say police need the capability to do electronic searches to identify sellers of stolen property. By

Former Toronto police officer Bud Jensen, who is now BWI's vice- president of sales in eastern Canada, points out that most municipalities have required used-goods shops to supply names and addresses to police for decades.

Ontario legislation requires pawnbrokers, who offer loans secured by used goods, to record information about the goods and client in a book, and report daily to police.

Police would have to sort through drawers of paper when investigating property thefts, or trying to assist officers from other jurisdictions, he says.

Durham Region Detective Constable Robert Hawkes told the newspaper Oshawa This Week in 2003 that he would not have solved a burglary case in Uxbridge if the accused had not sold goods in neighbouring York Region, where pawnshops send information to BWI.

"We're a little bit behind the times," said Hawkes, referring to the lack of such reporting in Durham. Sergeant Paul Malik said police "are trying to get something together" in Oshawa.

They appear to have succeeded, but the city has agreed not to enforce its new requirements until the court challenge is resolved.

Illustration
TONY BOCK TORONTO STAR The Oshawa bylaw will require shop owners to gather and submit consumers' personal data, then charge them up to $1 per transaction to submit it. Local Cash Converters franchisees Danny Nigris and wife Tammy, above in the store, estimate the cost would be about $8,613 a year at the level of transactions they had in 2003. HANS DERYK TORONTO STAR Jewellery dealer Russell Oliver outside his Eglinton Ave. store. "It is an independent company that will make a fortune out of this," he says about a database municipalities, police, and a software firm want. TONY BOCK TORONTO STAR The Oshawa bylaw will require shop owners to gather and submit consumers' personal data, then charge them up to $1 per transaction to submit it. Local Cash Converters franchisees Danny Nigris and wife Tammy, above in the store, estimate the cost would be about $8,613 a year at the level of transactions they had in 2003.


Brought to you by WikidFranchise.org

Risks: Privacy laws, Canada, 20060123 Bylaw battle

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License