Obtaining Consent To The Use Of Credit Scores: OPC Provides Guidance

by Dentons

On December 19, 2012, the Office of the Privacy Commissioner of Canada released Report of Findings #2012-005 (dated April 27, 2012) regarding obtaining meaningful consent to the use of information provided to credit reporting agencies. The complaint arose when an insurer increased the home insurance premiums for a couple based on a credit score.

Obtaining Meaningful Consent

In the OPC’s view, the insurance company made a number of errors in obtaining consent. Among the more interesting issues:

  • “May” can be misleading. Organizations tend to “hedge” in their disclosure regarding their privacy practices with the liberal use of the word “may” in their privacy policies. In this case, the organization stated that it “may use the score as one of the rating factors”. In practice, however, the organization always used the score at the first renewal of all policyholders. The OPC stated:

“In our view, a customer reading the company’s notice could form the general impression that they are exempted from the practice, or that it applies only in a minority of cases (e.g., individuals with a consistently poor credit history). In actual fact, the company applies the practice broadly and consistently.”

  • Transparency involves education. Part of obtaining meaningful consent involves educating the consumer on the use of his or her personal information. The OPC concluded it was unreasonable to expect that an individual would understand that information regarding credit worthiness in a loan or credit context would be used to establish the probability of an individual making an insurance claim. Indeed, the use of the credit scores to determine insurance risk may not be well-understood by Canadian consumers. The OPC cited a November 2010 survey commissioned by the Insurance Brokers Association of Ontario that reported, according to the OPC, that three out of every four consumers do not understand that their credit score is used to determine insurance risk and their premiums for insurance.
  • After-the-fact notice does not equate to meaningful consent. The dissemination of more detailed information regarding the use of the credit score prior to the one-year anniversary of the policy was not adequate to obtain consent to the use of the credit score at renewal. The OPC concluded that the request for consent had occurred at the time of the application and this was the relevant point at which information regarding the purpose and sue of the credit score must be provided.
  • If there is an industry code, you should follow it. The organization’s troubles were not assisted by the fact that it did not follow the industry code regarding obtaining consent. The OPC stated as follows:

“Moreover, we note that the company does not appear to be following the guidance provided by its own industry association with respect to consent. The Code provides detailed instructions for obtaining consent to the use of credit information and advocates for obtaining express and informed consent. While we acknowledge that the Code is voluntary, as noted above, our view is that its presence indicates that special considerations are warranted for the use of credit information. Accordingly, we find the Code to be informative with respect to the parameters it sets for obtaining appropriate consent in the context of using credit information in underwriting and rating activities for personal insurance.”

Reasonableness and Public Policy

Subsection 5(3) of the Personal Information Protection and Electronic Documents Act provides that an “organization may collect, use or disclose personal information only for purposes that are reasonable person would consider are appropriate in the circumstances.”

Although the OPC acknowledged that the Ontario Consumer Reporting Act permitted the use of consumer reporting agency information to assess insurance risk, the OPC was clearly troubled and has left open the possibility that the OPC might conclude that the use for insurance purposes is unreasonable. The OPC stated that “there is no obvious link between credit information and insurance premiums.”

As such, the OPC intends to continue to conduct research and monitor the public policy issues regarding the use of credit information for the purposes of assessing insurance risk. This statement is curious. Could it be that a practice expressly authorized by a Legislature could be found to fail the reasonableness standard in subsection 5(3) of PIPEDA? This would appear to raise significant constitutional issues entirely sidestepped by the OPC, at least for the moment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dentons | Attorney Advertising

Written by:


Dentons on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.