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Telecommunications company accused of doing a credit check without consent

PIPEDA Case Summary #2003-193

[Principle 4.3, Schedule 1; Subsection 5(3)]

Complaint

An individual complained that a telecommunications company did a credit check against the individual's wishes.

Summary of Investigation

An individual applied for residential long-distance services from a telecommunications company. On the application form, the individual clearly indicated that no credit check was to be done. Approximately one month later, the individual discovered that the company had requested information about this individual's credit from a credit agency.

The investigation revealed that the first application form the individual filled out, and on which "no" was indicated beside the clause authorizing the company to do a credit check, was inadvertently destroyed by the company representative when it was sent to the central office. The individual filled out another form and again made it clear that no credit check was to be done. The company representative then suggested that the individual opt for a pre-authorized payment plan to avoid a credit check. The individual therefore provided the representative with a sample cheque. Claiming the form received did not mention that the individual was opposed to a credit check, the company's central office had a credit agency do the credit check since, according to the company, this procedure was mandatory to obtain services, as it serves to verify the credit standing and ensure the financial capacity of the new subscriber. While drafting his findings, the Commissioner was informed by the company that it had modified its policy so as to allow potential clients who did not want a credit check done to opt for a pre-authorized payment plan.

Commissioner's Findings

Issued July 10, 2003

Jurisdiction: As of January 1, 2001, the Personal Information Protection and Electronic Documents Act (the Act) applies to any federal work, undertaking or business. The Commissioner had jurisdiction in this case because the telecommunications company is a federal work, undertaking or business as defined in the Act.

Application: Principle 4.3, Schedule 1 of the Act, states that all individuals must be informed of any collection, use or disclosure of their personal information and consent to it, except where appropriate. Subsection 5(3) states that an organization can collect, use or disclose personal information only for purposes that a reasonable individual would consider appropriate under the circumstances.

Following the investigation, the Commissioner believed it was reasonable for the telecommunications company to collect personal information to check the credit standing of a potential client. However, the Commissioner found that the company did not comply with Principle 4.3 since it did not comply with the individual's clear wishes opposing a credit check.

The Commissioner found that the case was well-founded.

Further Considerations

The Commissioner recommended that the telecommunications company take measures to avoid reoccurrence of a similar situation. He recommended that the company clearly indicate on its application form the content of its new policy making it possible for a client who does not want a credit check done to opt for a pre-authorized payment plan. The Commissioner also recommended that the company representatives be informed about this policy.

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