TD Bank should have seen ‘red flags’ as senior lost $732K in romance scam, son says

TD Bank should have seen 'red flags' as senior lost $732K in romance scam, son says

The son of an Ontario senior who drained his entire life savings and then went deep into debt says TD Bank didn’t do enough to prevent his father from being victimized — over and over — in a romance scam.

Dayle Hogg says his late father Robert, a widower, went into his local TD branch in Whitby, Ont., 19 times over a period of eight months and wired a total of more than $732,000 to Malaysia.

The money was for a woman Robert knew as “Sophia Goldstein,” whom he’d met online but never in person — and who doesn’t really exist.

“There should have been red flags going up all over the place at the bank,” said Dayle Hogg.

“He had no history of sending money anywhere outside of the country until this point. Something should have happened to stop this.”

Most fraud goes unreported, but the Canadian Anti-Fraud Centre says victims of romance scams lost almost $25 million in 2018, up from $17 million reported in 2016 — making it the most costly scam the centre tracks.

“The banks are well aware of the romance scams that are going on,” said Garry Clement, a financial crime expert and former RCMP investigator. “If the banks don’t start taking responsibility for these type of things, more and more are going to continue.”

However, Clement acknowledges that such scams put banks in a tricky spot. They are expected to try to protect the customer from financial fraud, which could require asking potentially intrusive questions, while also respecting the customer’s right to privacy and to use their money as they see fit.

In Robert Hogg’s case, TD says its staff asked Hogg all the necessary questions. The bank says it fulfilled his requests because he told a consistent story about building a house in Malaysia.

The scam begins

Robert Hogg had been married for 44 years when his wife, Kathy, died of cancer in 2015. The following year, he was diagnosed with pancreatic cancer.

In 2017, at the age of 67, he joined the online dating site and soon met “Sophia Goldstein,” who claimed she was on a business trip in Australia but would soon be returning to Toronto.

“Sophia Goldstein” was actually a phoney name used by a scammer or group of scammers. According to web chat correspondence with Robert, within weeks “Sophia” began calling Robert her “lover” and “husband.” She also told him her previous relationship ended because her partner hadn’t been there for her.

After Robert Hogg lost his wife of 44 years, Kathy, to cancer, he went on a dating site and was quickly sucked into a romance scam. (Submitted by the Hogg family)

The two began making plans for a life together, but within a month “Sophia” asked Robert to wire $2,000 to her, claiming she was having banking issues and couldn’t access her own money.

Soon, her requests increased to $10,000 and then $50,000 at a time. She provided various reasons for why she needed the loans, and instructed him to wire the money to “friends” in Malaysia, claiming that would be the easiest way to get the money to her in Australia.

She coached Robert to tell bank employees that he was wiring the money to a family member, and to keep their relationship secret, saying she wanted to surprise his friends with him when she returned to Canada.

Robert Hogg had been a customer at this TD branch in Whitby, Ont., for three decades. This is where he wired money to various people in Malaysia on 19 occasions during an eight-month period. (Jon Castell/CBC)

Between September 2017 and April 2018, Robert Hogg went to his TD branch in Whitby, located east of Toronto, and dutifully wired his entire life savings to Malaysia, believing he was helping the new love of his life.

When his investment accounts ran dry, TD helped him open a home equity line of credit for $300,000 — much of which he also wired offshore in regular instalments.

None of this was discovered by his family until he passed away from pancreatic cancer last September and his grown children began going through his paperwork.

“Initially, it was just like a punch in the gut,” said his son, Dayle. “I felt bad for him that this situation had happened.”

Robert Hogg’s son says online scammers sent his father a photo of this woman, claiming her name was Sophia Goldstein and that she was a successful businesswoman from Toronto. (Submitted by the Hogg family)

His shock quickly turned to anger when he added up wire transfer after wire transfer, and realized the money had been drained from accounts at his father’s trusted bank.

“Given the amounts that were leaving the country, there should’ve been somebody asking some serious questions,” Dayle said.

TD: ‘Detailed questions’ asked

TD Bank declined an interview request from Go Public.

In an emailed statement, senior manager of corporate and public affairs Carly Libman wrote: “Our review of this case found that our employees followed rigorous processes to fulfil the customer’s request, asking detailed questions at each transaction, including the purpose of the transfers.”

Dayle Hogg filed a complaint with TD’s ombudsman, who investigated the case. The ombudsman’s report also found the bank acted appropriately.

It says Robert Hogg “told a number of branch representatives that he had purchased land in Malaysia and was building a house,” which was why he needed to wire money.

As this story was “consistently told,” the ombudsman wrote, it “is not necessary to ask a customer to provide proof to support a story like the one he told.”

The report also says there was “no reason to question” the reason Hogg cashed in his investment accounts — despite the fact it would lead to a significant tax bill — or why he needed to open a line of credit after his investments were gone.

What we need is to have our financial institutions ensure anything that’s an anomaly involving a senior, there’s questions and red flags raised.– Garry Clement, financial crime expert and former RCMP investigator

None of this sits well with Dayle Hogg, who claims the ombudsman’s investigation contains “inconsistencies,” “serious omissions” and “incorrect statements.” For example, the report says his father made 14 wire transfers for a total of $603,000, when it was actually 19 wire transfers totalling more than $732,000.

The ombudsman’s report also doesn’t address Dayle Hogg’s chief request — that TD improve its procedures to ensure vulnerable people are protected from similar scams in the future.

“The fact that you ignored this request completely and failed to even address it speaks volumes to TD Bank’s ethical and moral values,” Hogg said in a written reply to the bank’s ombudsman.

Banks must strike ‘appropriate balance’

Trying to protect customers from scams while also respecting their privacy can be tricky business, the Canadian Bankers Association says.

“Ultimately, banks must strike an appropriate balance between helping to prevent and detect fraud, while also protecting the rights of their customers to access their money,” spokesperson Mathieu Labrèche said in a statement  to Go Public.

“As the owners of the account, the customer is responsible for any funds that she or he withdraws from their bank account.”

Banks have no national standards or policies when it comes to protecting people from romance scams, but Labrèche says bank staff “are aware of fraud scams and are trained to ask probing questions if a customer makes an unusual transaction.”

The bank is starting to ask questions about all the money I’m sending.–  Robert Hogg, writing his online love interest “Sophia”

Although now deceased, Robert Hogg left a written record of his conversations with “Sophia.” In an exchange on Jan. 2, 2018, he says staff at his local TD branch are starting to wonder about all the wire transfers.

“The bank is starting to ask questions about all the money I’m sending,” he wrote.

Go Public can’t confirm what was discussed at TD that day, but records show that a bank employee helped Hogg wire another $50,000 during that visit. Over the next four months, he wired a further $168,000.

Police contacted

When Dayle Hogg discovered what happened to his father’s money, he contacted Durham Regional Police.

“They were fairly disinterested, saying it would be almost impossible to catch criminals in Malaysia,” he said.

A police spokesperson said there is an ongoing investigation. TD said it has not been contacted by police.

Financial institutions must automatically report any overseas transaction greater than $10,000 to the Financial Transactions and Reports Analysis Centre of Canada, but the federal watchdog only investigates suspected money laundering or terrorist-financing activities.

Former RCMP superintendent Garry Clement says banks have a moral and ethical obligation when dealing with seniors to take appropriate steps to detect scams and take action. (CBC)

Financial crime expert Garry Clement says banks have to respect customer privacy, but they have an equally important responsibility to try to protect them from financial fraud. It’s even more important in the case of seniors, he says, because they are more likely to be taken advantage of.

“What we need is to have our financial institutions ensure anything that’s an anomaly involving a senior, there’s questions and red flags raised.”

Meanwhile, the scammers seem unaware that Robert Hogg passed away last fall. Dayle Hogg occasionally corresponds with them, posing as his father, hoping that somehow, some day, police investigators will be able to catch them.

In Dayle’s most recent exchange, “Sophia” claimed she needed money to pay some bills. She asked him to wire money, writing: “Try $5000 if you can.”

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Big telcos hike internet prices amid soaring demand, revenues

Big telcos hike internet prices amid soaring demand, revenues

You can run but you can’t hide from internet price hikes. That’s what Sean Barry in Powell River, B.C., learned after leaving his provider, Shaw, following a couple of price increases.

He switched to competitor Telus in September only to discover that the cost of his current Telus internet plan is also going up — by $5 a month.

“I am choked over the increase so soon,” said the 71-year-old Barry, who lives on a fixed income.

“Every year it just goes up and up and up.”

Telus, Bell and Shaw are all raising prices on select internet plans over the next few months. The hikes come on the heels of internet price increases by Telus, Shaw, Bell and Rogers in 2018.

Sean Barry, of Powell River B.C., says he is on a fixed income and switched providers after Shaw increased its prices. He was unhappy to learn that his new provider, Telus, is hiking his bill by $5 a month. (Submitted by Sean Barry)

Meanwhile, Canadians are living more of their lives online and signing up in record numbers for internet service, driving up revenues for providers. 

“They can do whatever they want; it’s big business,” said Barry. “We’ve just got to suck it up.”

Price hike roundup

Beginning on Feb. 25, Telus will hike rates on internet plans by $2 to $5 a month.

On Feb. 1, Bell will raise internet prices by $5 a month for Bell Aliant customers in Atlantic Canada. In Ontario and Quebec, the telco is hiking various internet plans by up to $6 a month as of March 1.

“I laughed, because I pretty much knew it was coming,” said Christopher Provias, of Welland, Ont., after learning that he’s facing a $5 monthly increase on his Bell internet bill.

“It’s pretty much like clockwork.”

On April 1, Shaw also plans to raise rates on select internet plans. The telco declined to say by how much prices are going up.

Why raise prices?

In 2017, home internet was the fastest-growing sector of all telecommunications services.

According to the latest Communications Monitoring Report by the CRTC, Canada’s telecom regulator, 86 per cent of Canadian households subscribed to home internet service in 2017, up almost four per cent from 2016.

Canadians are also demanding faster internet speeds with more data — average monthly data use for high-speed users jumped by a whopping 30 per cent in 2017 compared to 2016.

Bell, Telus and Shaw say they have to raise rates to continually improve their networks to accommodate growing demand.

Bell said customers’ internet usage has increased by more than 500 per cent over the past five years.

“Our costs to meet that demand and provide customers with the best experience possible also continue to rise,” said spokesperson Nathan Gibson in an email.

Total Canadian internet service revenues in 2017 (Communications Monitoring Report 2018/CRTC)

Industry analyst Dwayne Winseck acknowledges that the big telcos are investing significant amounts in their networks. But he says that’s not the only reason customers face higher internet bills. 

“These price increases are at least as much, if not more, about protecting very high operating profits,” says Winseck, a professor at Carleton University’s School of Journalism and Communication.

According to the CRTC report, residential internet service revenues, including applications, equipment and other related services, totalled $9.1 billion in 2017 — an 8.8 per cent increase over 2016.

‘Makes me so mad’

In a notice sent to customers facing price hikes, Bell said it invested $4 billion in its infrastructure last year. 

But that’s cold comfort for Dennis Fitt, of Truro, N.S., who’s facing a monthly increase of $9 come February for his bundled internet, phone and TV service with Bell.

“Their profits aren’t enough to cover the infastructure — this $4 billion that I have to pay for now?” said Fitt, whose family of six relies on internet for both their TV and phone service. 

“It just makes me so mad.”

Because the internet has become so important in Canadians’ lives, Fitt believes the CRTC should do something to ensure prices don’t get out of control.

“The CRTC should call [the internet] a necessity, and at that point they should be able to regulate it a lot more than they do now.”

The telecom regulator is currently exploring an internet code of conduct to address a growing number of complaints from Canadians about their internet service.

86% of Canadian households subscribed to home internet service in 2017, up almost four per cent compared to the previous year. (Nathan Denette/Canadian Press)

While there’s no mention of price regulation, the CRTC says the code would include measures to make it easier for consumers to switch providers to take advantage of competitive offers.

For Canadians planning to make a switch, there are a growing number of independent internet providers such as TekSavvy, Distributel and Start that offer competitive rates. 

In 2017, only 13 per cent of Canadian internet subscribers were signed up with an independent, according to the CRTC report.

Reasons for the modest uptake include the fact that many are unaware of Canada’s smaller providers or are fearful of switching to a lesser-known company

Others believe they’re better off bundling their internet with other services at a discount with one of the major telcos. 

Barry in Powell River says because he has a promotional deal with Telus, if he cancelled his internet, he’d likely face a bigger bill for his phone and TV service with the company

“They’ve got you coming and going,” he said. 

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For the love of eel: N.L. company developing new product for international market

For the love of eel: N.L. company developing new product for international market

For years North Atlantic Aquaponics has been shipping live eels to markets in Korea and Ontario, but now they’re working to take their products to a tasty new level. 

The company, which started on the west coast community of Robinsons, is collaborating with the Functional Foods Laboratory at MUN’s Grenfell Campus in Corner Brook to test and develop a new recipe for kabayaki eel. 

“Kabayaki is just barbecued or grilled eel with a specific type of sauce,” said facilities manager Justin Stacey. 

“We’re doing different testing and analytics of the eel itself to find the best way to keep and maintain the most nutritional value that we can. On top of that, we’re trying to find the best tasting, best esthetically pleasing, all the variables that go into developing a product like this. And with MUN’s facility, we got it all here.”

Justin Stacey, facilities manager with North Atlantic Aquaponics, was on hand at Grenfell to oversee product testing. (Jennifer Grudic/CBC)

There is a stigma attached to it, so when you approach a market in Newfoundland or in Canada in general, we kind of have to calibrate our approach.– Justin Stacey

The Functional Foods Laboratory, under the direction of Dr. Raymond Thomas, allows students from a variety to backgrounds to test, analyze and develop food products.

This week the public was asked to take part in a tasting experiment that got them to rate and rank four different kabayaki samples based on things like appearance, flavour and texture.

Graduate student Melissa Hamilton is overseeing the project. (Jennifer Grudic/CBC)

The survey involved groups of people, 10 at a time, given sample plates through a small door and then asked to answer questions on the computer in front of them. 

Science meets product development

Graduate student Melissa Hamilton is leading the project, which she says incorporates elements of both psychology and chemical analysis, as well as real-world practicality. Once the consumer testing is complete, they’ll be able to provide North Atlantic Aquaponics with information to help them develop their product. 

The lab can accommodate 10 testers at a time, each with their own computers to answer survey questions. (Jennifer Grudic/CBC)

“Let’s say that the consumers say the product is a bit too salty, then we’ll have to make an adjustment in that regard. Or say they like a certain packaging, because that’s one of the options as well, then we’ll use the one our participants are leaning towards,” said Hamilton.

She said the lab is ideal Corner Brook’s campus attracts people from different demographics.

“So it’s the ideal place to conduct this type of survey to get people from all over the world and get their perception of the food we’re trying to develop.”

Changing attitudes

If everything goes according to plan, Stacey said, they hope to soon be shipping their new kabayaki product to markets in Korea and Ontario. 

One of the biggest obstables, however, is attitudes about the product here at home. 

Grenfell’s Functional Foods Sensory Laboratory is designed in such a way that test participants can be served food straight from the test kitchen through a small door. (Jennifer Grudic/CBC)

“I know my grandfather fished and ate eel. It was part of the culture and part of his lifestyle. Now, to talk to my friends and people my age, there are very few that have eaten eel,” said Stacey.

“There is a stigma attached to it, so when you approach a market in Newfoundland or in Canada in general, we kind of have to calibrate our approach.” 

Read more from CBC Newfoundland and Labrador

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Abandon Trans Mountain if consultations fail to satisfy all Indigenous stakeholders, says Singh

Abandon Trans Mountain if consultations fail to satisfy all Indigenous stakeholders, says Singh

Jagmeet Singh says the federal government should be willing to terminate the expansion of the Trans Mountain pipeline if consultations do not end in “partnership” and “buy-in” from all the communities along the route.

“They can’t say that they want to build something and say it’s going to be built, and then on the other side say, ‘We’re going to meaningfully consult with communities.’ That is not meaningful consultation if you’ve already decided the outcome,” the NDP leader said in a wide-ranging interview to air on CBC’s The National this Sunday night.

Singh declared last spring that he was opposed to the Trans Mountain expansion project. Alberta Premier Rachel Notley, a New Democrat who has been lobbying hard for Trans Mountain, called Singh’s position on the pipeline “naive.”

Singh, who doesn’t currently hold a seat in the House of Commons, is now running in the federal byelection in Burnaby South, a community where many have deep concerns about the pipeline and its expansion. Voters go to the polls Feb. 25.

‘Open to no’

Singh said Ottawa should be “open to no” after its second round of consultations with First Nations.

Last August, the Federal Court of Appeal quashed licensing for the $7.4 billion expansion project, telling the Trudeau government it would have to do further “meaningful” consultation with First Nations and that concerns about increased tanker traffic had not been adequately addressed.

The government accepted those findings and named former Supreme Court justice Frank Iacobucci to lead Phase 3 of its Indigenous consultations. No deadline has been set for those consultations to end.

Singh said that if those consultations suggest that not all communities on the pipeline route are on board, the federal government must accept that.

“I mean the communities that are impacted, the lands, the sovereign nations that are impacted, may not accept that this is a project that they want to support,” he said. “And that is something that the government has to be prepared to accept.”

A Supreme Court decision from 2017 (involving the Ktunaxa Nation and the development of a ski hill) made it clear, however, that section 35 of the Constitution — which deals with Indigenous rights — does not give Indigenous communities the right to veto a project.

“Where adequate consultation has occurred,” that ruling said, “a development may proceed without consent.”

Singh acknowledged the legal limits but suggested that reconciliation with First Nations means the government ought to go further.

“Well, we’ve got to be committed to doing more than just checking off a box,” he said. “That’s not enough. That’s not actually going to be reconciliation. If you just go say, ‘Well look, I’ve done this and I’ve done this I’ve checked off a box … that’s not meaningful reconciliation.”

NDP Leader Jagmeet Singh speaks to the CBC’s Rosemary Barton. When it comes to consulting Indigenous communities on the Trans Mountain pipeline, he said, “we’ve got to be committed to doing more than just checking off a box.” (CBC News)

The government made the decision to purchase Trans Mountain for $4.5 billion after project proponent Kinder Morgan deemed it too financially risky to pursue due to the drawn-out court challenges. Prime Minister Justin Trudeau has said he is committed to the project and believes it is the “national interest.”

Singh said the project should be driven by the private sector and no public money should be used for resource development.

As for the tens of thousands of Canadians who rely on the oil sector for work — or who have been laid off from oilpatch jobs in recent years — Singh said it’s not their “fault” the energy sector is unpredictable and the government should be investing in “sustainable” jobs for the future.

On the issue of climate change, Singh said that if he were to be elected prime minister he would set much tougher national emissions targets — despite the fact that no developed country, Canada included, is on track to meet the emissions targets set in the Paris climate accord.

Singh also said he supports a carbon tax but wants a “progressive” one that costs more for those who emit more while costing families less. He would not go into details on how that would work, saying the NDP’s carbon tax plan will be released eventually.

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DNA ancestry tests, food waste and juice gets squeezed: CBC’s Marketplace consumer cheat sheet

DNA ancestry tests, food waste and juice gets squeezed: CBC's Marketplace consumer cheat sheet

Miss something this week? Don’t panic. CBC’s Marketplace rounds up the consumer and health news you need.

Want this in your inbox? Get the Marketplace newsletter every Friday.

Why do we waste so much food?

Buying more than we need and expiration dates are partly why more than half of all food produced in Canada is lost or wasted, according to a Toronto agency that works to reduce food waste. One industry expert says at least a third could be salvaged and one barrier is confusion about best before dates. Check out our 2016 investigation on supermarket food waste.

Experts say some of the food waste can be attributed to confusion about best before dates. (Justin Sullivan/Getty Images)

Juice squeezed out of the food guide

Orange juice is part of a balanced breakfast, right? Maybe not. A new version of Canada’s Food Guide could soon drop juice. After decades of considering it a serving of fruit, Health Canada expressed concern about sugar content in juice, even from a natural source. We tapped into the debate a few years ago when we investigated “premium” orange juices.

An Ontario real estate agent says some of her clients have used technology to find out what potential buyers are saying during viewings of their homes. (Jonathan Hayward/Canadian Press)

Caught on camera: homebuyers

If you’re looking for a new house, you might want to watch what you say at your next viewing. An Ontario real estate agent says two of her clients recently used cameras and microphones to eavesdrop on potential buyers. The wrong comment could end up being used against you, but a privacy lawyer says homeowners aren’t required to warn about surveillance.

Health Canada may remove juice from Canada’s Food Guide because of concerns over sugar content. (Jill English/CBC)

What else is going on

A game that simulated diffusing a bomb was pulled after backlash. Cut the Wire involved a ticking toy bomb connected to numerous wires that needed to be disconnected before it pretend-exploded. After parents complained to retailers, the manufacturer said it would stop distributing the game in North America.

Gymboree closing its stores, including 49 in Canada. The kids’ clothing retailer had previously closed a third of its stores in 2017 when it first filed for bankruptcy protection. The company has suffered from reduced mall traffic and a shift to online shopping. 

Bad gas killed Calgary-area cars. The station’s fuel tank was contaminated with saline and caused several vehicles to seize up and stop starting. Insurance companies are still investigating who’s at fault.

The latest in recalls

This bread sold in Newfoundland and Labrador could contain glass. The company voluntarily recalled 30 types of bread after a light bulb broke in the production area, but no glass has been found in packages.

Plus: These HP computer batteries could overheat; these  heating pads could also overheat; the  hardware on these cribs could detach; the  rattles on these socks could be a choking hazard; the steerer tube collar on  these bikes could crack; these  bicycle brakes could fail and the manual for  these fitness trampolines gives incorrect folding instructions.

This week on Marketplace:

Charlsie Agro on our investigation into Ancestry DNA Testing Kits

What are you? Where are you from? It’s a question I’ve been asked all my life. People stop me on the street, even our viewers have emailed asking, “What’s your nationality? Are you from Zimbabwe?” This week, I get some answers… sort of.

Marketplace host Charlsie Agro, left, and her twin sister Carly sent their DNA to five popular ancestry companies for testing. Did the identical twins receive identical results? (CBC)

Marketplace is putting five of the most popular ancestry DNA testing kits to the test. But there’s a twist: My identical twin Carly (on the left) helps us investigate. We are supposed to have identical DNA, so we should have the same ethnic break down too, right?

DNA ancestry testing is big business, but how accurate are the results? Don’t miss this week’s show, especially if you bought one of those kits for a relative over the holidays.


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Union wants Canada Post to start low-income bank and green shift. Sounds nice, but who pays?

Union wants Canada Post to start low-income bank and green shift. Sounds nice, but who pays?

As arbitration grinds on at Canada Post following back-to-work legislation passed in November, the union has made a series of proposals beyond standard contract negotiations on wages and benefits: they want the Crown corporation to open a new bank for low-income people and turn the post office into a hub for green technology

With one of the country’s largest vehicle fleets that could be converted from gas to electric power, 6,000 distribution outlets where electric car-charging stations for consumers could be built, and old buildings ready to be retrofitted with solar panels, the post office is well positioned to help Canada transition to a greener economy, said the union’s president.

There’s one major problem with the ambitious proposal, according to critics: Who’s going to pay for it?

Debates over how institutions should reduce their carbon footprint — and how the changes should be financed —  are playing out across the public and private sectors as leading scientists warn the world has just 12 years to drastically reduce emissions to avoid catastrophic climate change. 

“Climate change is the biggest challenge facing humanity,” Mike Palecek, president of the Canadian Union of Postal Workers (CUPW) said in an interview. “We have to address it … Canada Post is the biggest piece of federal infrastructure, it has the largest vehicle fleet in the country, it would be a good place to start.”

He couldn’t say how much the proposals would cost.

Canada Post declined to comment on demands for a postal bank and the green retrofit. “With the arbitration process now underway, it would be inappropriate to comment on specific negotiations issues,” a spokesperson told CBC News by email. “We are committed to the process and are fully engaged with the union and the arbitrator.”    

A government-appointed arbitrator is expected to announce a deal for a new contract in March, after workers on rotating strikes were legislated back to work in late November amid long delays for packages amid the Christmas delivery rush.

Banking on change

The proposed postal bank is aimed at rural residents, including First Nations, who often don’t have easy access to a bank branch, said John Anderson, researcher with the Canadian Centre for Policy Alternatives, a think-tank whose advocacy areas include reducing income inequality. It would also benefit low-income Canadians, including pensioners and the working poor who often depend on payday lenders for loans, cheque cashing and other financial services.

Popular in France, the U.K., Italy and other countries, postal banking in Canada would almost certainly be profitable, he said, citing a 2016 survey that suggested three million Canadians and about one-third of businesses would use financial services from the post office.

Management at Canada Post — including president and CEO Jessica McDonald, at the podium, and CFO Wayne Cheeseman, left — has not been receptive to demands for a green retrofit or postal banking, the union says. (Sean Kilpatrick/Canadian Press)

The post office already handles financial transactions, and the federal government runs other successful banking organizations, such as the Export Bank of Canada and Farm Credit Canada, Anderson added.

Canada’s federal pension plan even invested in China’s postal bank, he said, indicating that such plans are financially viable. 

“The federal government — through its ownership of Canada Post —  is the only body that could bring modern financial services to every community in Canada,” Anderson said. “That would be great competition for the big banks, which are profitable partially because of the high service fees they charge compared to other banks worldwide.”

Taxpayer interests

Canada Post hasn’t been receptive to demands for the green retrofit or the postal bank, according to CUPW’s president.

That’s a good thing, said Alex Whalen, vice-president of the Atlantic Institute for Market Studies, a Halifax-based think-tank that supports reducing government spending.

“I don’t think taxpayer interests would be served by those proposals,” Whalen said. “The concern has to be that there are public dollars involved.”

As a Crown corporation, Canada Post is required to be financially self-sustaining. With more than 60,000 employees, the company made a pre-tax profit of $74 million in 2017, largely due to increased parcel delivery thanks to Amazon, according to its financial statements. Investing in projects outside of its core mandate of delivering mail could jeopordize its profitability, Whalen said.

“If there were good returns in this kind of business, the private sector would already be doing it,” Whalen said of the proposed postal bank. “If the union thinks this is a great idea, are they going to be an investor in the bank?”

Pension financing?

To finance the union’s proposals, there is one obvious source of funds outside of asking taxpayers or the company: workers’ pensions.

With about $25 billion under management, stocks in the big Canadian banks and oil companies — some of the very industries the union’s proposals are trying to tackle — make up some of the largest investments for postal workers’ pensions, according to 2017 financial statements

The workers, however, have no say over how their pensions are invested, Paleck said. “We have no decision-making power whatsoever.”

Canada Post workers seen here during the last hours on the picket line in Montreal on Nov. 27, 2018, before returning to work, ordered by the government to end their rotating strike. (Ryan Remiorz/Canadian Press )

That situation isn’t unusual for Canadian workers, said Tessa Hebb, a researcher at Carleton University’s Centre for Community Innovation who specializes in responsible investing.

“Some representation from employees would be really beneficial, both for the positive components for adjusting to a low-carbon economy and also for the basic protections for workers,” from bad decisions by pension fund managers, she said.

However, she cautions against the idea of using pension funds from CUPW to finance new initiatives at Canada Post like the postal bank or green retrofit.

“You don’t want the pension funds to be constrained in investing in their own business,” Hebb said. “The legal term for that is self-dealing.”

Such moves have often hurt workers when the companies themselves face financial trouble and look to their employees’ pension funds as a source of capital, she said, citing the examples of Sears and Nortel Networks.

In the U.S., pensions under union control — or funds jointly managed by workers and management — have made a series of profitable investments in green technologies or urban renewal projects like affordable housing, she said. And there’s no reason why similar successes couldn’t be replicated in Canada. 

“Ten years ago, if you were a pension fund in California and you were an early investor in Tesla, you certainly made your money back and then some,” Hebb said. “The shift to a low-carbon economy is going to bring forward some really interesting investment opportunities.”

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U.S. faces deadline to extradite Huawei exec from Canada

U.S. faces deadline to extradite Huawei exec from Canada

U.S. authorities are facing a key deadline at the end of the month to formally request the extradition of Huawei executive Meng Wanzhou from Canada to the United States.

On Friday, a spokesperson for Canada’s Justice Department said the U.S. had yet to file the required paperwork in the Meng case and stated the Americans have until Jan. 30 to do so. If the U.S. misses the deadline, lawyers with expertise in extradition cases say the door could open for Meng’s eventual release.

Canadian police arrested Meng at Vancouver’s airport Dec. 1 at the request of American authorities, who are seeking her extradition on fraud allegations. They say she lied to American banks as part of a scheme for Huawei to avoid U.S. sanctions against Iran.

Her arrest has infuriated Beijing and the case is at the centre of an increasingly testy diplomatic dispute between Canada and China. The Chinese government says Meng has done nothing wrong and has demanded her release, warning Canada of severe consequences if it doesn’t free her.

Under Canada’s extradition law, the U.S. was given 60 days from the date of Meng’s arrest to make its formal extradition request.

“The formal request for extradition [including the supporting documents] has not yet been made by the United States,” Ian McLeod, a spokesperson for Canada’s Justice Department, wrote in an email Thursday.

Watch: How powerful is Huawei?

How did Huawei, a Chinese telecom company born out of the telecom boom of the late 1980s, become the largest telecommunications firm in the world? Wendy Mesley explains why Huawei faces growing scrutiny over privacy, security and its 5G networks. 2:12

“They have until Jan. 30, 2019 to submit this request. Canada then has a further 30 days to determine whether to issue an authority to proceed.”

The U.S. Department of Justice declined to say very much about the Meng case except that it’s not affected by the partial shutdown of the federal government there. Thousands of federal workers have been sent home without pay because of a budget stalemate between Congress and U.S. President Donald Trump.

“We have no comment other to say that the current operating situation has no impact on our filing preparations,” the department’s public-affairs office said.

Meng case in ‘political stage’

Gary Botting, a Vancouver lawyer with significant experience in extradition cases, said recently appointed federal Justice Minister David Lametti would have an obligation to discharge Meng if the U.S. misses the deadline.

“If it hasn’t arrived in the 60 days then every journalist in town should be jumping up and down to insist that Meng get discharged according to the act,” Botting said in an interview. “That’s what the act says… The minister must discharge them according to the rule.”

Meng’s case, Botting added, remains in a “political stage” and won’t go before the courts — and into the “legal stage” — until Lametti makes the decision to introduce an authority to proceed.

Meng, Huawei’s chief financial officer, is out on $10-million bail and is staying at her Vancouver home. She has been ordered to appear in a Vancouver courtroom on Feb. 6 to fix a date for further proceedings.

Lawyer Donald Bayne, who represented Ottawa professor Hassan Diab as he fought extradition on French terrorism charges for years, said it’s not particularly unusual that U.S. authorities had yet to submit the formal request for Meng so late in the 60-day period.

He thinks they’ll make the deadline.

“The Americans… having caused all of this so far — would never be able to say with a straight face, ‘Yeah, we’ve decided not to go ahead’ or ‘Gosh, there was nothing to our case,’ ” said Bayne, who’s based in Ottawa.

Canadians arrested in China

In the days that followed Meng’s arrest, China detained two Canadians. Michael Kovrig, a Canadian diplomat on leave, and Michael Spavor, an entrepreneur, were taken in on vague allegations of engaging in activities that have endangered China’s national security.

China also sentenced another Canadian, Robert Lloyd Schellenberg, to death in a sudden retrial of his drug-smuggling case. He was originally sentenced in 2016 to a 15-year term, but the court delivered the new sentence after reconsidering his case.

Western analysts believe the arrests and the death sentence are part of an attempt by Beijing to pressure Canada into releasing Meng.

Watch: Canada pushes for ‘immediate release’ of detainees in China

Canadian officials visiting China say they’ve raised the issue about the two detained Canadians with their Chinese counterparts. 4:04

Bayne said he doesn’t think Meng’s case would end even if the Americans missed their deadline — but comments by Trump might do it.

He noted how last month the U.S. president raised questions about the basis of the extradition request by musing in an interview with Reuters about interfering in Meng’s case if it would help him strike a trade deal with China.

Meng’s legal team could argue Trump’s remarks, which essentially made her a “human bargaining chip,” indicated an abuse of process.

On the U.S.-China trade front, the deadline in the Meng case will coincide with high-level negotiations between Washington and Beijing, said the Chinese Ministry of Commerce.

China’s Vice-Premier Liu He, the country’s economic point person, is scheduled to travel to meet with U.S. Trade Representative Robert Lighthizer in Washington on Jan. 30 and 31 for a round of talks. They will meet as their two countries are locked in a tariff conflict that’s rattled the global economy.

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Costco-style membership for hay aims to modernize handshake deals

Costco-style membership for hay aims to modernize handshake deals

Cindy Wilinski says 100 years ago if you needed to buy hay for your livestock you tracked down a local farmer, by phone or in person, made a deal and hoped the product was as good as advertised.

She said nothing much has changed today, except now it might be purchased via an email or over text message.

“It’s still the old handshake kind of deal and hope you don’t get ripped off,” said Wilinsky, who owns an equine training and breeding facility near Okotoks.

Wilinsky said she first got the idea of bringing the hay business into the 21st century after a drought in 2015 left a lot of people scrambling to find hay. At that time she started a Facebook hay-sourcing group called the Haylist — a database that amassed more than 7,000 members — where people could list hay for sale, request hay and list trucking services.

The Haylist is still going but Wilinski felt she could do more to help livestock owners find good quality, affordable hay from a credible and trustworthy source. That led to the creation of the Haybank, a Costco-style membership business she launched in the fall.

And, the response has been overwhelming.

“We literally ran out of all the hay we had lined up that was on the yard as well as what was coming.”

Those who sign up pay an annual $500 membership fee, plus the cost of the hay they purchase and transportation if needed. (Contributed)

Rather than the handful of memberships she expected, 83 people signed up within weeks, including Priddis-area rancher, Danny Lansdowne.

“This year hay is all over the map and I can’t afford the $200, or $180 [per bale],” said Lansdowne, who purchased hay for his five horses and cows.

“It’s a blessing.”

Wilinski attributes the higher than expected demand to a prolonged drought pushing up the price of hay, while any lower priced hay is being snatched up, and in some cases, she says, it’s being turned around and sold at a higher price.

“You know it’s just one of those things that turns your stomach.”

Those who sign up pay an annual $500 membership fee, plus the cost of the hay they purchase and transportation if needed.

The fees allow Wilinski to purchase bulk amounts of hay, in some cases entire crops,  and keep the transportation costs down. She’s sourced hay as far east as Ontario, and south to Montana.

“The problem has always been in making the trucking affordable so it’s not landing here being priced higher than what they need locally for it,” she said.

From the feedback Wilinski’s received so far, she says people are appreciative of having a secure way to buy hay.

“And you’re not sending an e-transfer to somebody you’ve never met for hay you’ve never seen.”

Wilinski said she tests the quality of the hay once it arrives, and only after she confirms the amount and quality does she put it up for sale.

In the months since opening the Haybank Wilinski says she’s managed to work out some of the kinks, address some of the growing pains and put a more balanced system in place.

“(We’re) just trying to make sure everybody gets the feed they need for this winter,” she said. “Because by the looks of things so far we’re going to have another year that’s not looking so grand unless we get an awful lot of rain or some late snow.”

Wilinski said she’s already heard from people who want to invest in her business and hopes to get more trucks rolling in order to service her customers even better.

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Virtual dealership promises no used car salesmen

Virtual dealership promises no used car salesmen

When Trevor Bergmann of Halifax went looking for a second-hand car, he decided to check out a brand new way to shop for one. 

“My partner Jennifer found a vehicle online — it linked through to this company, Clutch, and we thought it was the best idea ever,” said Bergmann, 36.

Clutch is what could be called a virtual dealership. Instead of visiting one or more showrooms to compare vehicles, consumers browse the website for a used car, and a “Clutch concierge” brings it to their home or workplace for a test drive. 

“Going to every dealership to have a look at the vehicles we wanted was less ideal than having somebody bring us the vehicles,” says Bergmann, CEO of commercial drone operator AeroVision, who took a 2017 Ford Explorer for a spin during his lunch hour.

The Clutch website allows consumers to search the company’s inventory by make, colour, price and mileage. (Keith Whelan/CBC News)

Innovation is a big deal in this business, given that most Canadians buy second-hand. Consider this: a record number of new vehicles were sold in Canada last year —  two million — but that same number of used cars is sold annually in Ontario alone.

Unlike other online used car sites, such as AutoTrader, which are classified ad sites that connect buyers and sellers, Clutch owns all the vehicles in its inventory.

Nationwide expansion planned

Clutch also says it offers better prices.

“Most new entrants in an industry might provide a better service, but they do it for a bit more money,” says co-founder Stephen Seibel. “Think of something like Uber Eats — food comes to your door but you’re paying a premium.”

But Seibel says that without the overhead costs of a flashy showroom or commissions to sales staff, Clutch can price its cars at $2,000 less, on average, than a regular dealership.

He points to CarGurus, a website founded by the co-founder of TripAdvisor, that promises “unbiased insights” on car pricing and dealer reputation. The site shows price savings on Clutch vehicles as high as $4,693 and as low as $400. 

Clutch makes money the same way a bricks-and-mortar dealership does: by marking up the prices of cars it buys at wholesale auctions, to create a profit margin. But it can profit with a smaller markup thanks to its online business model and reduced overhead costs.

Stephen Seibel is one of the three partners who co-founded Clutch. (Keith Whelan/CBC News)

So far, the company operates only in Halifax, but it intends to launch in Vancouver by June, then in Montreal by the end of the year, with a plan to be nationwide within five years.

Siebel says as far as he knows, Clutch is the only company of its kind in Canada.

“Canadian auto customers have been deprived of the car buying experience that they deserve,” Seibel said. “We truly see Canada as being 30 years behind the U.S. in terms of customer experience for buying a used car.”

Sleazy reputation needs fixing

Virtual dealerships have, indeed, taken off in the American marketplace. Carvana, Vroom and Shift are all business models similar to Clutch operating south of the border. Like Clutch, all promise concierge service and quality guarantees.

Consumers are keen: Arizona-based Carvana was founded in 2012 and now operates in 60 cities. The publicly traded company is currently valued at more than $5 billion US on the stock market. 

“Buying a car is the second-largest purchase in a person’s life, and they’re just having atrocious experiences,” Seibel says of the way consumers have traditionally shopped for a used car.

“We want to give them a better option.”

Used car dealers have, indeed, been stereotyped over the years as sleazy salesmen in plaid sports jackets, interested less in a customer’s needs than in scoring a commission. In reality, there are many professional, ethical used car dealerships and dealers, but even the head of their professional association acknowledges an image problem.  

Warren Barnard, executive director of the Used Car Dealers Association of Ontario, says his members aren’t overly concerned about new, online competition. (Keith Whelan/CBC News)

“Our reputation as an industry still needs to be improved,” said Warren Barnard, executive director of the Used Car Dealers Association of Ontario. He said the industry is raising its standards through education programs.

“As the new generation of dealers and salespeople come into the industry, they’ll have this background behind them, to be more familiar with the increased transparencies, and so some of these questionable practices of the past will be long, long gone — and they’re on the way out now.”

Is Canada ready?

But many Canadian consumers are already moving their car purchases to the internet. Online auctions have become more common. And Canada’s largest classified advertising service, Kijiji, is about to launch a standalone used vehicle website, Kijiji Autos.

Still, bricks-and-mortar dealerships may not need to fear widespread competition from virtual competitors like Clutch for years. 

Seibel says Clutch faced regulatory hurdles in Ontario when it first proposed to launch in the province. The Ontario Motor Vehicle Industry Council (OMVIC) said any company involved in the buying and selling of cars must register as a dealer, and that the Clutch business model didn’t fit the bill.

Canada’s largest classified advertising website, Kijiji, is launching a stand-alone used vehicle website, Kijiji Autos. (Kijiji)

That may change by the time Clutch attempts to enter the Ontario marketplace next year.

In an email to CBC News, a spokesperson for OMVIC said the agency acknowledges that the regulations, drafted before 2010, “did not contemplate many of today’s emerging business models.”

“To that end, OMVIC is working with the government to review and modernize the legislation.”

Seibel suspects the regulator’s concerns may have eased in part because more dealers of both new and used vehicles have begun to offer concierge service.

And he’s confident about national expansion, believing that provincial governments and even other auto dealers will eventually embrace a more convenient way to sell used cars. 

Barnard, of the Used Car Dealers Association of Ontario, says his members aren’t too worried yet about new online competition.

“Most people are still buying their cars at physical dealerships,” he said. “And that will continue for quite a while. This digital market is coming, but it’s coming in as more of a tide than a tsunami.”

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Computer scientist David Magerman wants to build a more ethical internet

Computer scientist David Magerman wants to build a more ethical internet

Multi-millionaire computer scientist David Magerman believes he has met the enemy, and it is us.

Maybe not exactly the flesh-and-blood us, but certainly our cyberselves — the unwitting employees of Facebook and Twitter who absently click great gobs of our personal information into the maw of social media, allowing a handful of internet titans to put it to work and make more money than God.

For one thing, Magerman resents that people on his payroll spend some of their workday on social media doing things that benefit the bottom lines at Facebook and Twitter.

They’re “moonlighting,” he says, “and I’m paying them.”

But most worrisome to him is that people don’t seem to understand the value of the personal information they give up as they surf the web, and how it is being used to shape their world and bend their preferences —  including their political preferences.

“We’re spending our productive time helping Facebook and Twitter be valuable,” he says. And if we don’t even realize that’s what we’re doing, how can we choose whether we want to do it?

Rather than just patch the holes in the internet with quickly obsolescent security products, Magerman imagines a whole new layer to cyberspace — a renovation with more privacy, data protection, encryption and transparency.

Important to him in all of this is a question that has nagged him since the election of Donald Trump: What role in his win was played by the data we unconsciously surrender in the deeply flawed cyberspace we wander through every day?

Many observers believe sophisticated online data mining helped Donald Trump become U.S. president in 2016. (Jeff Roberson/Associated Press)

Magerman gained momentary fame a couple of years ago as an outspoken critic of Trump — and of his own boss, hedge fund billionaire Robert Mercer. Mercer was a pioneer in the use of data for investing, and was an owner of the now-defunct data mining firm Cambridge Analytica, which some believe had a significant role in electing Trump in 2016.

All of that has ultimately driven Magerman to a new purpose in life: To try to strangle the golden goose of the internet economy — data collection — and replace it with something more socially useful and less profit-driven.

He’s looking for ideas and, if no one else will, he’ll put some of his own money into them.

A better internet

Magerman worked at Mercer’s hedge fund, Renaissance Technologies, for a couple of decades, using his computer science background to help make a fortune for himself, for Mercer and for the business.

Even then, Magerman was conscious of how little social benefit came from his work. He saw Renaissance Technologies as “a place that uses really bright people, who could do a lot of great things in the world — and simply has them sit at their desks and make money from money.” And yet, he was one of those people.

But it was over Trump that Magerman had a tabloid-worthy falling out with Mercer, Trump’s most influential backer.  

Magerman argued with Mercer about all of that—specifically about race politics — and was fired. He filed a wrongful dismissal suit with sensational allegations of racism against Mercer that lit up the normally prosaic business press, which had previously reported with envy and awe on the rise of Mercer’s company to the pinnacle of the hedge fund world.

Robert Mercer is the enigmatic co-owner of Cambridge Analytica, a data analysis firm that is widely thought to have had a large role in Trump’s election win. (Oliver Contreras/Washington Post/Getty Images)

Eventually, the suit was settled. Magerman says he got everything he wanted, but he didn’t go back to work. He continued to nurture his bitterness about the 2016 election and a suspicion that Facebook and Cambridge Analytica had somehow helped usher Trump into the White House.

How much data analytics really had to do with the outcome in 2016 we might never know. But it added to Magerman’s discomfort with the downside of the internet.

“We are creating social and emotional and psychological cancer for society through how technology is infiltrating and being adopted,” he says, echoing the comparison that others have noted between Facebook and the big cigarette companies of the last century.

So, how to change that?

Creating a new ‘layer’

Magerman’s first foray in the battle was to get behind the Freedom From Facebook campaign, which is trying to persuade regulators to rein in the company and break it up. He was the original donor to the cause last fall with a gift of $400,000.

But breaking up Facebook doesn’t guarantee something more socially responsible will slide into its place.

That’s where his new partnership with venture capitalists comes in. Last fall, Magerman joined Differential Ventures to work with a couple of angel investors, Nick Adams and Alex Katz. They both have experience seeding start-ups, with an interest in big data and its impacts.

Having made a great deal of money working for Mercer’s hedge fund, Magerman is now looking for ways to create a less profit-driven internet. (Jason Burles/CBC)

It’s Magerman’s hope that they can begin to imagine a new kind of  internet, one built to be safe and secure, where a constrained Facebook and Twitter would be worth just a fraction of what they are today — valued by what they actually do for their customers, not what their customers’ personal information does for them.  

“I’m talking about creating that layer,” he says, “where everything is encrypted and every single communication in that environment has an identity associated with it — meaning a human being.” (Magerman concedes there is a need for some anonymous space to protect dissidents in repressive countries.)

Imagine a Twitter without anonymous trolls and bots, or a Facebook that didn’t presume to curate your life — or even a cyberspace safe for children.

Less profit-driven

The problem investors normally have with something like that sounds like a punchline.

“They don’t see how to monetize it,” says Magerman, “and I think there is truth in that.”

But actually, that’s the point. Part of the way many internet-based companies have become so fantastically successful is through their indifference to social responsibility. A company that profits by treating its customers as though they’re merely data-generating employees is not a socially responsible business model for the internet — it’s a parasite.

In the world according to Magerman, a company like Facebook would have to be content with being a $10-billion company, not a $500-billion company.

Therein lies the real obstacle. The first steps toward a new kind of internet will require government intervention, says Magerman. And, since it’s ultimately about taking power from the powerful, there will be resistance to that.

Lots of it, and well-funded — through all those profits earned by social media giants thanks to you and the personal data you’ve given up without so much as a whimper.

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