All about SIN
By Maya Saibil • Bankrate.com

Most of us are reluctant to give out our Social Insurance Numbers (SINs). And we should be. The Canadian government reports that every year, thousands of people are victims of identity theft. And in many cases, the crooks have obtained the victims' SINs. Fortunately, there are precautions you can take to help prevent the wrong people from getting a hold of your SIN.

What is it?
A SIN is a nine-digit number that serves as your personal account number for the federal government. It was created 1964 to serve as a client number for the Canada Pension Plan and Canada's employment insurance programs. A few years later, it began being used for income tax purposes. Your SIN is also necessary for other financial purposes, such as collecting employment insurance, banking and doing business with insurance companies.

When you must give out your SIN
For purposes such as renewing your driver's licence, applying for a mortgage or applying for a hunting licence, you have to give your SIN. You can also give your SIN to institutions such as banks, credit unions and trust companies. For a list of legislated uses of the SIN and programs authorized to use the SIN, visit The Office of the Privacy Commissioner of Canada's website.

Although there are only certain situations when you must give out your SIN, it's not against the law for companies or organizations to ask for it, and many do. PhoneBusters, Canada's anti-fraud call centre, recommends giving out your SIN only when absolutely necessary and using other types of identifying information when possible.

Why companies and organizations want your SIN
Tim Richardson, an e-commerce professor at University of Toronto and Seneca College, says people are easily tricked into giving up their SINs. He says companies want SINs so they can use it to cross-reference you with other databases, which allows them to find out what other products and services you've used. "Two thousand and six, and beyond, is all about specific direct contact and being able to be more targeted and focused in advertising," says Richardson, "and this information allows companies to do this."

Aside from becoming a target of this personal selling or direct mail (or as some like to refer to it, junk mail or spam), the bigger problem with companies getting a hold of your SIN is this: the greater the number of people who have access to your SIN, the greater chance an immoral employee will use it for criminal purposes.

The workings of identity theft
Someone can use your SIN for a variety of nefarious purposes, including applying for a credit card, opening a bank account and renting a car. For example, if a fraudster has the correct spelling of your name, your date of birth and your SIN, he could use that information to apply for a credit card with your name and his mailing address.

Detective Staff Sergeant Barry Elliott, the creator and coordinator of PhoneBusters, says that if you can prove you were the victim of identity theft, you will not be responsible for any charges incurred by your impostor. "The bank is the one that's going to lose the money," he says.

Elliott says that we don't have much control over our personal information. "Your name and all your personal information are at your employer's place, your insurance, your bank, at the video store around the corner, all over the place," he says. "And you have no control over that storage. So you're at mercy of their security, and any breach in that security. And 70 percent of data that is stolen is believed to be done through a corrupt employee. So all of us are basically vulnerable all the time -- we just don't know it."

How to fight identity theft
Elliott says what you can control is the ability to monitor your credit. "We used to say to check your credit report at least once a year," he says. "But that's not good enough; what you should be doing is monitoring your credit seven days a week, 24 hours a day. And you can do that; the problem is there's a fee involved." Various companies now offer around-the-clock credit checks starting at about $15 a month.

"If we had everybody in Canada monitoring their credit all the time, we wouldn't really have an identity theft issue in Canada," says Elliott.

There are many ways to minimize your risk of identity theft, including not carrying around your SIN card -- leave it in a secure place and memorize the number. For more tips, check out Bankrate.ca's story Guard yourself against identity theft.

What to do when you don't want to give up your SIN
If you're in a situation where you know you don't have to disclose your SIN, such as at your local video store, then don't. Most reputable companies and organizations won't bug you for it.

When Richardson is asked for his SIN from a party he knows doesn't need it, he switches the last two digits. "If they come back to me and say it's wrong, which rarely happens, then I deal with it," he says. Richardson advises others to question if companies actually need your SIN. If you're unsure of what the company wants your SIN for, you should ask why they need it and how it will be used.

Unfortunately, no plan to protect yourself from identity theft is foolproof. So, if you suspect your SIN has fallen into the wrong hands, contact Social Development Canada.

Maya Saibil is a writer in Toronto.