The Credit-Spy Can Ruin You.

He Knows— And Tells


The Credit-Spy Can Ruin You.

He Knows— And Tells


The Credit-Spy Can Ruin You.


He KnowsAnd Tells:









Who has such awful power — over your jobs, credit, insurance, professional standing?

Typically, he is in his 20s, has a high-school education, earns $450 a month, stays at his job for a year or two. On the average he churns out your dossier in less than half an hour. He, and his office, often get it wrong. But you never know that — until there’s trouble. Even then, no laws control him. He can ruin you. And there’s nothing — yet — that you can do. He is a credit spy.


He lost 10 years through trial-by-hearsay

BRUCE MCGRATH still thinks credit and character reporting on people is necessary in today’s society . . . “but it shouldn’t be self-policing; there should be laws about false reporting.” Bruce McGrath should know. Seven years ago he collided with Canada’s credit-spy system and he has not recovered yet.

McGrath will be 34 in May. He is a second-year law student at the University of Western Ontario, London. He will be 37 before he can begin to practise law. His wife Judith, a nurse, will then have been the principal breadwinner for themselves and daughter Tracey, now nine, for most of 10 years.

When he was 27, the future looked good for McGrath. He was the branch manager for a finance company at Sarnia, Ontario. He had climbed aggressively, rapidly, in five years, through the hierarchies of three companies. He had made some enemies on the way up. But Sarnia was home and he was well known — especially as a 150-pound but terribly tenacious quarterback of the Sarnia Golden Bears and Sarnia Imperials. Then he resigned for personal reasons, which Maclean’s is satisfied had nothing to do with his ability, business judgment or honesty.

With his background, McGrath had no trouble getting job interviews with, he says,

12 different firms. In some instances he was told he was hired — but there was always a final rejection. He couldn’t find out why. Then a Sarnia-based businessman offered him a job, and McGrath told him, “I don’t know what it is, but something is wrong. I’ve had a dozen jobs offered and then withdrawn.” The man called on the McGraths a few days later. He brought a personnel file compiled by a large firm that specializes in such reporting.

That report quoted unnamed previous colleagues as saying McGrath had been fired. The reason given was the unspecified charge of Second class mail registration No. 1260

A credit report finished Bruce McGrath's career in 1963. He’ll be in a new one, the law, in 1973. He wonders if, even then, he’ll be able to see the report he could never answer.

“loose morals.” Ex-colleagues with an earlier employer said McGrath had been sacked there, too, when in fact he’d been promoted twice and had resigned for a better job. After his act of kindness in showing McGrath what was said about him (subscribers sign agreements not to let subjects see the report), the Sarnia businessman withdrew his job offer. McGrath was never able to get the reporting company to show him the file. No law says it must, unless the company is sued. Yet it was there for any subscribing business firm to see, for about $25 a time. He could not set the record straight; no law permits him that right.

Unable to find work, McGrath tried running his own Sarnia men’s-wear shop for nearly two years, but he was undercapitalized and failed. He job-hunted again, without luck. “Finally, we decided to make a whole new start,” he says, and the McGraths went to the University of Western Ontario. McGrath pays his law tuition with money earned doing part-time jobs, and with

the help of provincial loans and bursaries. Judith works at St. Joseph’s Hospital to meet the family expenditures. Their living is adequate, but tight.

McGrath remains “obsessed by the unfairness of it — nothing makes these people responsible for their errors. Surely there should be a right to know your accuser? Nothing even forces them to remove information after a certain passage of time — maybe I’ll still be under the gun when I graduate.” The credit-reporting agencies all say they remove adverse information eventually, often after seven years. But that is not required in law and there is no way of checking.

McGrath came to Maclean’s. We asked two agencies to report on him as a prospective employee. One quickly gave him a thoroughly clean bill. The other—the one that made the damning 1963 report — telephoned first to say that he was shaping up to be a bad risk. Then it sent a man around to say that McGrath was a troublemaker. We said we’d like a report, anyway. During this time we were interviewing officers of this and other companies about credit reporting, and this agency circulated a note to its employees advising them of Maclean’s interest. The McGrath report was vetted by the company’s home office in the United States. Finally we got it — 46 days after we had asked for it. Such reports normally take less than a week to provide. And McGrath, that bad risk and troublesome man, came through transformed. That old job of his? Why he wasn’t fired at all, but had resigned, according to the new report. Morals? — “No criticism of subject’s reputation or associates.”

Is that the company’s last word on Bruce McGrath? We don’t know. Neither does he. □

“A man’s right to privacy includes protection from any type of surveillance without his consent.”

Justice Minister John Turner, to Maclean’s

He says prying is good for us

“CREDIT IS A privilege and you must lose some of your privacy to prove you deserve it.” This is the blunt factsof-life talk of M. T. Pearson, general manager of the 153member Associated Credit Bureaus of Canada. “I don’t believe we are invading privacy — we are just gathering factual material,” he says.

Credit bureaus provide “factual material” on more than six million Canadians a year, establishing that almost mystical cachet of your worth, your credit rating. It is a mostly factual listing of how you’ve paid your debts, a list that is gathered from and shared by 40,000 business subscribers.

Credit bureaus send out no ferrets to judge your personal life. That is done by other, investigative, agencies whose “field representatives” question neighbors, co-workers, former employers — mostly for personnel and insurance reports, such as those on Bruce McGrath (left). But what the credit bureaus can do is keep on file facts — or alleged facts — that could, and do, damage the people they’re about without their knowledge. Truck-company owner Karl Reeser discovered that when he went to the Greater Toronto Credit Bureau, simply as a favor to his wife. Mrs. Reeser is active in the Consumers Association of Canada, which last spring made a national check on credit - bureau claims that any subject could

PRYING continued

see his file — and proved that many could not. Reeser was shocked to find two 1965 writs recorded against him, although one had been withdrawn and he had won the other. “I have a right to know what information is being gathered about me, and who is asking the questions,” he says. But, in law, he does not have that right.

While the 2,500 creditbureau employees do not go out to snoop, they do clip newspaper stories about us, delve into court reports and telephone our employers. Credit bureaus can give you someone else’s bad rating by mixing up names. They can also label you as a “bad payer” because you withhold payments on a defective article, which is your right under the law of contract.

Both credit bureaus and investigative agencies co-operate with the police and the income-tax department with-

“Your name will never be divulged to another member and, needless to say of course, never to a consumer.”

Brochure of Credit Bureau of Greater Toronto

out your knowledge, and with lawyers who use them for locating and getting information on people.

The credit bureaus are usually fair about repairing errors, according to new guidelines made to improve their image. Guidelines are not law, however. Should they be written into law? Pearson, convinced that business efficiency is society’s greatest virtue, differs with a growing body of lawyers and politicians who want everyone to be advised whenever adverse reports are made about them.

The immensity of credit in Canada gives urgency to the argument. Canadians are $11billion in debt. The total leaped by $1.5 billion in 1969. Collectively, we pay back $700 million a month on consumer debts, or $16 out of every $100 we earn after taxes. Pearson says buying on credit is so important that regulations

about privacy should not be permitted to dry up the flow of business information that makes it work. Professor Edward Ryan of the University of Western Ontario, adviser to a House of Commons committee studying privacy, says, however, that credit is “a social necessity for both business and individuals.” He says, business flourishes because it is “privileged” to grant credit; department stores did $600 million in credit sales in 1969, oil companies $175 million — new records for both. Moreover, business charges 18 percent and more interest on the business of credit. Ryan says the two factors must offset the three percent or less of bad debts credit bureaus report.

In a report to the Ontario Law Reform Commission, Ryan urges that invasion of privacy be made a legal offense. He would outlaw asking such questions as whether a person is “normal,” “welladjusted,” or “honest.” Prof. John Sharp of the University of Manitoba recommends that bureaus be forced to notify a subject when any — or at least, any adverse — reports are made about him. Pearson says that would cost too much. If the subject must be notified, he says, it should be by the department store that doesn’t grant credit, the employer who doesn’t hire him. Federal Justice Minister John Turner says his department will prepare laws this summer to protect Canadians from credit spying and other “data surveillance.”

Wayne Keeble (below), 29year-old Toronto salesman, is anxious to see his credit rating: “They will only read parts of the card to me,” he says, “including the part that says I am 41.” □