Problematic Ontario Pawnbrokers Act to be repealed

An interesting nugget in the Ford government’s recently introduced Bill 66, titled “Restoring Ontario’s Competitiveness Act, 2018” is Schedule 2, which repeals the Pawnbrokers Act. The repeal of the Pawnbrokers Act will end legislation that has, for more than 100 years, treated every user of the pawnbrokers’ services as a possible criminal.

From a privacy angle, the decision by the Ford government to repeal this legislation is welcome news. Far from being deeply concerned with privacy, the repeal likely has more to do with two issues. First, second-hand dealers are not covered by the legislation. There was no obvious reason why the administrative burdens of the legislation should fall solely on pawnbrokers. Second, members of the Ontario Association of Chiefs of Policy (OACP) basically threw up their collective hands in 2011 and told the public that they would no longer enforce the legislation.

There doesn’t seem to have been much consultation or advance notice to police services or municipalities of the proposed repeal. However, tiven the statement of OACP in 2011, it is unlikely that there will be much opposition from proponents of a law and order agenda.

It is likely that police have found that the sale of stolen goods has moved online. The investigative value of the pawnbrokers’ registers and reports is, therefore, even more limited. The big move will be in finding ways to automate the review of online sales to detect suspicious sales. The question will be whether we can develop privacy protective ways of doing so by combining machine learning with privacy by design and default. Or, is this a signal that government is abandoning recovery efforts for stolen personal property as a policing activity.

Invasive collection of personal information

The Pawnbrokers Act has, as one of its main purposes, assisting police in recovering stolen property and investigating property crimes. It is hard to argue that these are not valid purposes. The problem with the legislation is that it treats everyone using the services of a pawnshop to get a short-term loan as a potential criminal trafficking in stolen goods.

The legislation hasn’t changed much in a century. Back in the early days of the 1900s, a pawnbroker was required to be licensed and to make a report to the chief constable of the police in the municipality before 10 a.m. every day. The report was to contain information about all of the pledged goods received the previous day, the amounts loaned on the pledged goods and the number of pawn tickets issued. The police could inspect the pawnbroker’s books at any time. The books of the pawnbroker were to contain a description of goods, the amount lent to the pawner, the date of the pledge, a description of the pawner, the pawner’s address and whether the pawner was a lodger or a housekeeper, and the name and address of the owner of the residence.

Not much has changed. The current version of the Pawnbrokers Act. The pawnbroker still has to be licensed. A daily report to the policy is still required, although the pawnbroker has until noon to make the report. The pawnbroker still has to keep very detailed records of the pawners, including a physical description of the pawner:

9(1)(b) the full name, address and a description of the person delivering the article for pawn reasonably sufficient to identify such person, including sex, and estimated age, height, complexion and full particulars of identification if produced and, where the person who delivers the article for pawn states that he or she is the agent of its owner for the purpose of pawning it, the name and address of the owner

The pawnbroker’s books are still open to inspection by the police.

Operational ineffectiveness

Since 1998, the Ontario Association of Chiefs of Police (OACP) have been seeking amendments to the Pawnbrokers Act. In 1999, the OACP called on the government to replace the Pawnbrokers Act with provincial legislation governing pawn and second-hand dealers and to implement an automated data collection system to be used for the transfer of information occurring in these businesses to police crime investigation units. Importantly, OACP also wanted the information to be shared not just with the police service in which the pawnshop was located. This makes sense, of course. If you steal goods in Oakville, you might just as easily take them to a pawnbroker or second-hand dealer in Toronto.

In 2002, OACP even proposed draft legislation. By 2011, OACP gave up. Instead it took the step of announcing to the public that police would continue to try to identify thieves but that property recovery would no longer be a priority for the policy:

The OACP has informed the Attorney General of Ontario that since the ministry seems unable or unwilling to move forward with legislation, the OACP has advised Chiefs of Police to review the resources they commit to addressing the needs of victims in the area of property crime (and their relation to pawnshops/second-hand businesses) and consider advising those victims in their communities to seek remedy with their personal and property insurance carriers as property recovery would no longer be a policing priority.

Ontario Association of Chiefs of Police Statement to the Citizens of Ontario Regarding Pawnbroker and Secondhand Goods Stores (May 24, 2011) (May no longer be available online.)

Beyond the inefficiency of the paper reports, the legislation was arguably too narrowly focused on pawnbrokers. After all, if you were looking to fence stolen goods, a pawnbroker is not your only option. A major gap was that it did not cover second-hand goods stores. Although municipalities attempted to fill-in the gaps using by-laws, this practice ended in Ontario with the Ontario Court of Appeal’s decision in Cash Converters Canada Inc. v. Oshawa (City). The court held that the municipality’s licensing powers did not authorize it to collect personal information about individuals who sold goods to a second-hand goods store. The court concluded that legislation like the Pawnbrokers Act was required for this type of personal information collection. An earlier case in British Columbia (Royal City Jewellers & Loans Ltd. V. New Westminster (City)) came to a similar conclusion.

Although I could not locate any statistics, it is possible that pawnbroker and second-hand dealers are no longer even perceived by police to be the main avenue through which to monetize stolen property. Online classified ads and other online platforms may have become more central to the exchange of stolen property for cash. At least one police service has created an online stolen property team to scout the internet for stolen property and take action against the vendors.

Commissioner guidance

In a compelling and detailed study in 2006, the Office of the Information and Privacy Commissioner for British Columbia (BC OIPC), criticized what it then saw as a proliferation of bylaws requiring businesses to collect detailed information on customers and sometimes provide that information to the police. The BC OIPC doubted that this could be justified as part of the regulation of businesses and were instead programs to assist in the systematic surveillance of individuals by police. The BC OIPC found the impact on privacy to be out of proportion to the goals of these bylaws, which evidently were to deter crime and to facilitate police investigations. The BC OIPC stated:

Moreover, the impact on the rights of the individuals who are monitored, the vast majority of whom are simply using a completely legal service or buying legal products for innocent reasons, is a matter of considerable concern. It is unlikely that individuals who deliver secondhand clothing for sale by a consignment shop would expect their personal information to wind up on a nationwide police database, accessible to police agencies across Canada. Nor would they expect that renting a private mail box would result in their personal details being available in police information systems.

BC OIPC, Local Governments and The Growth of Surveillance (August 30, 2006)

The BC OIPC went on to say that it “strongly believes that municipalities should not be in the business of passing surveillance bylaws.”

For its part, the Ontario Information and Privacy Commissioner (IPC) followed the Cash Converters case and the BC OIPC report with its own Privacy Guidelines for Municipalities Regulating Businesses Dealing in Second-hand Goods. The IPC warned that municipalities that they were engaged in constructive collection and disclosure of personal information if they required businesses to collect personal information and provide it to the police. The IPC counseled municipalities to “[f]ocus on property, not people by collecting, using, retaining, and disclosing information about the goods themselves such as serial numbers, detailed descriptions or even photographs of the goods, rather than information about the seller.”

Where to now?

Laws can be a blunt instrument and there is no question that the Pawnbrokers Act is flawed. However, perhaps there is a role for government to spur development of technologies using machine learning to collect data from victim reports, online classifieds, and pawnbrokers and second-hand dealers to detect suspicious goods in a privacy protective way. So far, the Ford government seems more inclined to simply ditch the Pawnbrokers Act than address the larger policy issues that the Pawnbrokers Act was meant to address.

Interestingly, the repeal of the Pawnbrokers Act seems to have caught both the OACP and the Association of Municipalities of Ontario (AMO) by surprise. OACP noted when the Bill came out that it had been asking for the system to be replaced and said that it would look at the impact of the repeal without replacement. The AMO noted for its members that it would connect with police services to determine the impact and to consider alternatives.

To some extent, self-help technology may solve the problem of tracing stolen property. Apps embedded into devices might be able to detect unusual patterns of use or location for laptops and cell phones and other internet-connected devices and report themselves stolen before the owner even realizes it. For other types of property, small micro-adhesives have been developed to identify the registered owner.

However, these self-help technologies all involve building alternative surveillance systems that could be subject to just the type of abuse that the Commissioners were concerned about in their reports and guidance. Furthermore, to the extent that these tracing tools are user-operated, as is the case with tracking technologies for mobile phones, individuals might be tempted to take property recovery into their own hands, risking their lives in doing so. It isn’t clear that the government should simply walk away from personal property recovery as a legitimate policing activity.

Categories: Criminal Law, Privacy, Surveillance

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