National surveys show Canadian companies may be vulnerable to criminals

Sarah Staples
Sun

GLENN BAGLO/VANCOUVER SUN FILES Langley RCMP displayed some of the thousands of stolen documents belonging to Greater Vancouver residents — identity cards, drivers’ licences, credit cards — all seized during a raid on an identity-theft ring in August.

Two new national surveys have found disturbing admissions by Canadian companies of their vulnerability to hackers, and evidence that consumers fear personal information is at risk online.

A poll sponsored by a subsidiary of Capital One Financial Corp. and released Tuesday found 77 per cent of Canadians were concerned about identity theft, yet 45 per cent don’t regularly check credit reports.

A second telephone survey by Fusepoint, a Mississauga, Ont.-based IT management firm, Symantec Corporation and Sun Microsystems of Canada, Inc., found that eight in 10 Canadians worry about personal information stored in web-accessible databases.

In that survey of 565 Canadian consumers and business leaders, also released Tuesday, 14 per cent of Canadians admitted they had had their identity stolen by various means.

Some 57 per cent of companies answering the Fusepoint telephone poll admitted they were “only somewhat confident at best” in their IT department’s ability to withstand hackers.

The businesses admitted that both confidential corporate data and private customer data is threatened — even though 96 per cent of companies polled had established protections ranging from anti-virus and anti-spyware software to network firewalls or encryption.

“People haven’t been asleep in the wheel; they’ve invested in different types of technology and data security,” said George Kerns, president and CEO Fusepoint Managed Services Inc.

“But they’re still not confident they’ve got it licked.”

From January to October this year, there have been 9,034 victims of identity theft in Canada, totalling $7.2 million in losses, according to PhoneBusters, an RCMP-associated agency.

According to Kerns, company executives are more concerned that their employees might mistakenly download viruses, spyware or adware than they are about hacker intrusions.

One of the major sources of vulnerability are a new brand of malicious e-mails that specifically target employees, said Clemens Martin, professor of business and technology at the University of Ontario Institute of Technology, a new, tech-oriented university.

People are becoming wise to the classic “phishing” scam, in which victims receive a spam e-mail featuring a link or attachment, or are enticed to a Web site and duped into revealing personal information.

But in a version called “spear phishing,” a perpetrator researches a company before sending fake e-mails to a few employees.

The e-mail, disguised as coming from an internal source, might ask employees to download a screensaver with the corporate logo, or request passwords and other sensitive information be sent to IT managers conducting “network upgrades.”

Downloads contain viruses or malware that afford hackers entry, where real damage can be done including stealing intellectual property, damaging the company’s reputation or cyber-extortion — demanding cash in exchange for protection against future attacks, said Martin, who leads the fledgling university’s hacker IT research lab.

Spear-phishing is lucrative and “astonishing easy,” he said, adding “Traditional phishing attacks cast a wide net to catch many fish; this [spear-phishing] only takes one [employee] to achieve the goal.”

Spear phishers are also targeting ordinary consumers, with e-mails that are addressed directly to them and pretend to come from relatives, friends or business acquaintances.

Canadians are increasingly willing to take a stand, said Kerns.

Thirty-seven per cent, or more than one in four, would consider a lawsuit against a company that left personal information open to attack.

His firm operates 24 hours a day and deflects up to 200,000 hacker attempts daily, he said.

The Capital One survey commissioned Ipsos Reid to poll 2,002 Canadians, yielding a margin of error of plus or minus 2.2 per cent.

Fusepoint’s survey, carried out by Leger Marketing, is considered accurate within 4.1 percentage points, 19 times out of 20.

STEALING YOUR GOOD NAME:

Identity theft is a major concern for most Canadians, as excerpts from an Ipsos Reid survey done for Capital One Bank and released Tuesday shows:

77% of Canadians are concerned about identity theft.

10% feel that information available to guard against ID theft is fully adequate.

45% of Canadians do not review or monitor their credit reports on a regular basis.

21% feel that they are not well- or not at all informed on the issue of identity theft.

51% say “No” when asked if they keep unused credit cards locked in a safe place.

14% say they have been victims of “phishing”, which means they provided personal information online to a source posing as a legitimate institution, like a bank.

9,034* victims reported identity theft from January to October of this year.

$7.2 million* was the value of losses from those reported thefts.

Source: Ipsos Reid/*PhoneBusters

ON GUARD:

Tips on how not to become a victim of identity theft or fraud:

– If you are shopping online, only order on secure web sites — to ensure your information is protected look for an unbroken key or padlock at the bottom of your web browser.

– Streamline your wallet. Take only credit cards, cheques and/or cash that you need. This helps control spending and minimizes loss if the worst happens and your wallet is stolen.

– Protect your credit cards. Sign your card, and write that a merchant must “check ID” on the back of the card.

– Hold on to your receipts. When the clerk asks if you’d like to keep the receipt or “put in the bag,” keep it with you and get gift receipts that can be used for returns or exchanges. Store receipts in a safe place and shred them after you are certain the charges match those on your monthly bank and credit card statements.

– Beware of one of the newer credit card fraud scams known as “skimming.” Keep a close eye on your card while your purchases are being processed so that it is not swiped through alternative devices.

– Don’t leave valuables in your car.

Source: Capital One Bank

© The Vancouver Sun 2005

FRAUD I Young men troll the Internet looking for victims and their anthem is

Pay close attention to the downside

Inez Dyer
Province

EDMONTON — As I see it, your financial success or failure is all about numbers. Every time you make a financial decision, you have to pay close attention to the numbers and understand their potential upside or downside.

Unfortunately, selling at any cost appears to be the mantra of most financial-services representatives, and as a result people are watching their net worth slowly being eroded by fees, interest charges and payments that don’t work in one’s favour.

Here are numbers of which to be careful:

– Credit-card debt. If you have $17,000 owing on an 18-per-cent credit card and choose to make minimum payments, it will take you 65 years to pay off that debt.

– If you invest $100,000 in a mutual fund with a management expense ratio of 2.87 per cent, in 10 years you will pay $28,700 in fees. Add to this a couple of years when the fund may dip 10 per cent in value and you could wind up seeing 45 per cent to 50 per cent of your original investment evaporate.

– If you withdraw money just five times a month at a white-label or generic instant-teller machine, it will cost you anywhere from $15 to $25 in additional service charges every month.

– If you have a $150,000 mortgage at six per cent and make monthly payments over 25 years, that mortgage will cost you $287,912. If you change to a weekly payment, it will cost you $262,088, a savings of $25,824 in interest.

– Be careful when someone offers you, or especially your children, one of those $24.95/$29.95 monthly cellphone packages.

You’ll not only have to sign an airtight two-or three-year contract, but there are additional charges for virtually every function on these phones. Even the most careful users find it next to impossible not to incur additional monthly charges.

– Pay particularly close attention to load fee schedules before purchasing mutual funds. You could easily wind up paying a withdrawal fee up to seven years after making the original investment. I thought hostage-taking was illegal.

– Before you invest in a market-linked GIC, know the restrictions on your possible returns. Most of these GICs pay only a percentage of the total returns of the underlying market they are linked to. Ask before you sign.

– Before you take money out of an RRSP, consider your total income. While your bank may withhold only 10 per cent in taxes if the redemption is under $5,000, it will likely wind up costing you much more if your yearly income is in a higher tax bracket.

– If you’re an active stock trader, shop the market before opening a trading account. There is a huge selection of choices and fee structures. Read the fine print carefully to determine whether the trading fees are a come-on or the real deal. Also, ask about what it will cost to get your money in and out of your bank account.

– When leaving a company, carefully explore all your options prior to moving your pension into a Locked In Retirement Account. In most provinces there are tight restrictions on the amounts you can withdraw from a LIRA.

What looks like a huge pool of money may provide only minimal income, especially in the earlier years.

– If your company has a share-purchase program, take advantage of the benefit, but ensure you have the right to sell off some shares from time to time. Enron employees know about the perils of having all their financial eggs in one basket.

– Service charges. Go for the no-frills package at your peril. What looks inexpensive may wind up costing you the most.

If you pay for everything with your debit card, choose a fee package that allows unlimited self-

service transactions for one flat monthly charge.

In order to be financially savvy you not only have to know how to make money but also how to manage your costs and risk.

Remember, no one cares as much about your money as you. Use this motto — it’s a freebie with no strings or fees attached.

Chris Carter
Province

Several months ago, I read with interest when you wrote seniors could defer their property-tax bill. Is there any way to put this tactic to work to boost the value of my estate? The only significant asset I’m passing along to my heirs is my home.

— Elizabeth, New Westminster

Dear Elizabeth:

The provincial property tax deferment program for seniors allows homeowners over 60 (subject to a few conditions) to defer the property-tax bill on their principal residence as long as they live in the home.

Because the interest that is applied against the deferred taxes is relatively low and does not compound, there is a planning opportunity to invest these temporary tax savings in the hope of your investment outpacing the tax liability and the resulting difference being available to boost the value of your estate.

By putting the magic of compound interest to work for you over a longer period, the odds are stacked in your favour for this strategy to succeed.

If your plan is to defer the taxes until death and if you are in good health, another idea worth considering is to take the monthly amount you save on your property-tax payment and use it to buy a life insurance policy.

Providing the insurance costs are reasonable, this can be an effective way to improve the value and the liquidity of your estate. For a couple in good health, the cost of a “last to die” insurance contract is a fraction of the cost of an individual life policy, making this concept all the more feasible.

Use these ideas to reduce what you must pay next year

Ray Turchansky
Province

EDMONTON –Tax breaks may be well be on the way, but getting your financial house in order through year-end tax and financial planning is more important than usual this year, since deferring any income into a year when you might have a lower marginal tax rate will save you money.

Here are some ways to reduce your 2005 personal taxes, according to the tax and financial advisory offices of Deloitte:

1. Contribute to your registered retirement savings. Although the deadline for contributing to your RRSP for 2005 won’t be until March 1 of next year, the earlier you contribute the better, because tax is deferred on growth from the moment you invest.

If you have turned or will turn 69 during 2005, you must collapse your RRSP accounts, or their full market value will be added to your 2005 taxable income. Options include transferring your RRSP to a registered retirement income fund, taking out an annuity or receiving a lump sum.

2. Stagger taxes on certain capital gains. If you realize capital gains on the sale of property, you can spread out the taxes by receiving the proceeds from the sale over a five-year period. The term is 10 years for the transfer of farm property, shares from a family farm corporation or a small business corporation if the transfer is to a child, grandchild or great-grandchild living in Canada.

3. Defer taxes on certain stock-option benefits. If you exercised stock options in 2005 on publicly traded shares and plan to keep them until at least the end of this year, you can defer the benefit on exercising $100,000 of options because the amount is based on the fair market value of the shares when the options were granted. But to defer the benefit, you need to notify your employer by Jan. 16, 2006.

4. Use your capital losses. Early December is a favourite time of year for tax-loss selling, namely selling stocks or mutual funds outside your RRSP that have fallen in value, in order to crystallize capital losses that may be used to offset capital gains.

However, if you, your spouse or a company you control repurchases an identical asset within 30 days, the loss will be deemed superficial and disallowed for tax purposes.

5. Donate. Donations to registered charities made before the end of 2005 may be used to claim charitable donation tax credits for that year. The federal credits are 16 per cent on the first $200 and 29 per cent on the rest. Spouses are advised to combine donations and thus face the lower credit on the first $200 only once.

6. Check whether interest on your loans is deductible. Interest paid on home mortgage loans, RRSP contribution loans and life-insurance policy loans is not deductible. However, interest paid on loans for investments that produce income (such as rental income), interest or dividends is generally deductible.

7. Make certain disbursements before year-end. You can only claim some deductions and credits if the disbursements were made before year-end. Examples are charitable donations, child support (if deductible), child-care expenses, interest on investment loans, tuition fees, plus professional and union dues.

8. Plan to receive certain income or pay certain expenses. People with business income can decide which year is best to acquire depreciable assets or make maintenance repairs, depending on what income levels will be in various years.

9. Reduce your December tax instalment. If you pay your income taxes in installments and think your 2005 income will be significantly less than in 2004, consider decreasing the amount of your Dec. 15, 2005, instalment.