Legally Speaking with Michael Mulligan
Legally Speaking with Michael Mulligan
Legal Loopholes: The Million-Dollar Bitcoin Heist
What happens when a sophisticated scammer steals over half a million dollars in Bitcoin through a phone company's security failure? And more importantly, can you even take them to court?
The answer is more complicated than you might think, as we explore in this eye-opening legal examination of consumer rights in the digital age. A British Columbia resident fell victim to an elaborate fraud when someone impersonated a Rogers technician, convinced a retail employee to enable screen sharing, and accessed the Rogers customer database. After extracting personal information, the scammer performed a SIM swap and drained the victim's cryptocurrency account, assets that later appreciated to a staggering one million dollars.
When the victim attempted to sue Rogers, they encountered the hidden trap of arbitration clauses—those pages of legalese we all scroll through and accept without reading when setting up our services. Despite recent changes to BC consumer protection laws specifically banning these clauses, the court ruled in favor of Rogers on a fascinating technicality involving "retroactive" versus "retrospective" legislation. We break down this crucial distinction and explore how legislative language can determine whether consumers have access to justice.
The episode also examines a compelling Vancouver assault case that showcases the notorious unreliability of eyewitness identification. Despite a police officer's "100% certainty" about identifying a suspect from security footage, the court wasn't convinced, particularly when the officer failed to notice the suspect's distinctive "benzo gait," a hunched walking style common among drug users in the Downtown Eastside. This case provides a powerful reminder of why confident witnesses don't necessarily make reliable ones.
Whether you're concerned about protecting your digital assets or fascinated by the evolving landscape of consumer rights, this discussion offers valuable insights into how our legal system struggles to keep pace with technological change. Have you read the fine print in your service agreements? After hearing this, you might want to.
Follow this link for a transcript of the show and links to the cases discussed.
It's time for our regular segment, joined as always by Barrister and Solicitor with Mulligan Defence Lawyers, Michael Mulligan with Legally Speaking on CFAX 1070. Afternoon, Michael, how are we doing?
Michael Mulligan:Hey, good afternoon. I'm doing great. Always good to be here.
Adam Stirling:Some interesting topics on tap for us today, including the matter of cell phone bills, contracts and litigation arbitration. And do I read crypto loss there? What's happening here?
Michael Mulligan:Not good things. Never good things are happening when these cases wind up in court. I think that's the common theme.
Adam Stirling:Fair.
Michael Mulligan:So the case involved a person with a Rogers cell phone and the person was from British Columbia and there was a fraud perpetrated which, I must say, just reading the description of it in the case is boy, it's certainly a sophisticated one. The background of it this person had a cell phone since 2015. And then in 2021, a fraud artist pretending to be a Rogers technician called into a retail kiosk in Quebec City you know one of those kind of things you see in a mall, you know what I mean selling cell phones and that person, the fraud artist who called in, persuaded the clerk who answered the call that they were a Rogers technician and got them to enable screen sharing on a phone there I guess one of the ones that that company had. And then the fraud artist used the screen sharing to access the Rogers customer database and was able to extract personal information for it's unclear whether it's more than one person, but certainly this person and got a bunch of information, including cell phone and account information, and then used that to perform a SIM swap, like a little card that goes in your phone. That makes it work. I guess if you have enough details about the person, you can used that to access various things on the phone, including, very unfortunately, bitcoin wallets on the phone, which they then cleaned out of what amounted to $534,000 in Bitcoin, which shortly after this went up to a million dollars. So the fraud artist, by doing that, managed to get what amounted to a million dollars in Bitcoin.
Michael Mulligan:So the fraud artist, by doing that, managed to get what amounted to a million dollars in Bitcoin, and that resulted in this poor cell phone owner suing, not surprisingly, rogers Match, the company I guess was running that kiosk. Apparently they have a chain of those all across the country and the unknown clerk working for Match so sued them all. A clerk working for Matt so sued them all. And the lawsuit was brought on the basis of a number of things involving allegations of negligence and breach of contract and alleged breach of the Privacy Act which we have in British Columbia. And one of the interesting things is that the case was brought in British Columbia on the basis that the person lived here and there's a clause in the cell phone contract that speaks about the law and the jurisdiction where the bills are sent to being the applicable one, because otherwise there's some issue about whether this claim should be in British Columbia, ontario, where Rogers is based, or Quebec, where the retail kiosk was located, and so there. So claims started in all three of those places, because that was a little ambiguous.
Michael Mulligan:But the particular issue in the decision that just came out about this terribly unfortunate state of affairs involves what's called an arbitration clause, and those are a favorite, I must say, with large companies dealing with members of the public. And they are clauses buried in those service agreements that most people scroll through 10 pages of legalese sue us If you have a dispute. You've got to go to arbitration, which could have, I guess, various advantages for the companies involved, right, and one of the things they are doing not this was the purpose of this particular case but one of the things those prevent are class actions, right, because each person has to go to arbitration so you can't sue us in court. Look, you would read to that on page 14 here in the tiny print. And those have become so notorious, those arbitration conditions, that in British Columbia just recently there were changes made to the consumer protection legislation that essentially prohibits those things, because they just have an unfair result basically for consumers, and so that change, which just occurred recently, says that those are no longer effective. You can't squeeze those into your tiny print and stop people from going to court when your million dollars in Bitcoin gets stolen. But it says, in addition to this this is really the interesting issue with this case it says that those changes that say no more of those things the arbitration conditions apply to contracts entered into before, on or after the changes came into effect. Okay, and so those changes came into effect. Okay, and so those those changes came into effect March of this year. So this case goes to court with Rogers asking that the claim be stopped on the basis that this person had agreed to the tiny print about only being able to go to arbitration. And the person in court argued well, hold on as of March 2025, this, this is not allowed. I'm a consumer, you know. This is not some big business, it's just some poor person who scrolled through their terms of service with them. And this is. You know. This change is effective before, on or after the coming into force of the prohibition on these things. So you know aha, know aha, that's it Too bad. Rogers was the claim. However, this is the interesting interpretation issue.
Michael Mulligan:There's a couple of different legal concepts. One is the concept of a change affected by legislation which is retroactive versus a change which is retrospective. What does that mean? I don't know. Well, here's what it means. If you have a retroactive change, it affects legal rights directly for things that have already happened. Like it goes back in time and changes how the law would work. Okay, a retrospective change would be like a change that might affect, like, how things would occur. Like in this case, with a contract that was entered into in 2015,. Right, this, you know, tiny print from 2015. If the change is retroactive, it goes back in time and changes what that contract means or how it's enforceable. If it's retrospective, the change is simply how that contract would be interpreted for things going forward.
Michael Mulligan:It's a subtle change and there is a principle of statutory interpretation that says that, unless legislation is clear that the intent was to make the change retroactive, it's not. And so when you think about that I mean you think about it in this context right, it would be lawful, for you know, there's the authority to make retroactive changes to the law that could affect how things would happen, you know, involving issues that occurred before that anyone had even considered it. And sort of on one level, he thinks well, that's awfully unfair, right? People kind of govern their affairs based on what the law is. How are you supposed to know if it's going to change?
Michael Mulligan:You know, 10 years down the road and there's been some litigation about that in British Columbia and in fact one of the cases referred to involved the University of British Columbia, where it became ambiguous as to whether they had any authority to collect parking fines that's an interesting little tributary of the law and they were potentially liable, if they didn't have authority to do that, to have to give all those fines back. They've been collecting for years from people. And in that case the government enacted legislation that retroactively empowered the University of British Columbia to collect fines for parking infractions before the legislation existed. And in that case, ultimately the Court of Appeal upheld that and they said well, look, there's no constitutional prohibition on doing that. You can change things after the fact as long as you're clear about it. And in that case legislation was made clear about it so that even though the university might have collected fines they had no authority to collect. The legislature just came along and retroactively gave them the authority to do so. So they got to keep all the parking fines. Well, unfortunately, here for the cell phone owner, minus the million dollars in Bitcoin.
Michael Mulligan:The judge found that those provisions, even though they speak about contracts entered into before, on or after the coming into effect of that change that bans these clauses, that it wasn't clear enough to make it retroactive. It was only retrospective, which means that if you entered into that one of those cell phone contracts like this poor person did back in 2015, and somebody steals your Bitcoin after getting access to your phone by calling into some service kiosk or some other hack which might be viewed as sort of you know, probably the negligence claim would be like hey, you probably shouldn't have your employees, you know, giving phone callers screen access to the Rogers computer system. Right, the reasonable claim that that's kind of careless or negligent you would be protected against that arbitration clause. If that happened now, even though the contract, whenever you scrolled through the fine print and hit accept, accept, accept, so your phone worked, you'd be okay to sue now. But it doesn't go back and change the state of affairs for things like this before the change, and so the effect of it is Rogers was successful in stopping this person from suing them and now their remedy is to go through an arbitration process. We'll see what remedy they get from that.
Michael Mulligan:And then the other interesting thing is that the person argued well, hold on. Okay, fine, if Rogers has outfoxed us with that argument here, we should still be able to sue the kiosk, the match people you know I didn't have any, they didn't scroll through any tiny fine print with them, it was just some person you know. So why should they be prevented from doing that? But the Rogers and match were successful in stopping that too, and they were successful in stopping it on the basis of the fact that the two claims were so intertwined. You know who's on the hook for that? Match, rogers, you could. If you had one thing in court and one thing in arbitration, you'd have multiple proceedings. There could be inconsistent results. It would waste time and resources. Those were their arguments and that carried the day. And so the effect of this is that the person will be stuck with the arbitrator dealing with the million-dollar claim against both Match and Rogers.
Michael Mulligan:And so, looking at all this, it's, I think, good from a consumer point of view that these things, which I think have generally just worked unfairness on consumers, are banned going forward. But it may be that this is one of those cases, like in the UBC case where they said no, we're clearly saying you could keep the fines from before. It might be one of those cases where fairness would dictate a legislative response to this saying so clearly this is retroactive. Too bad Rogers, too bad large companies that stick these things in here. You won't be able to get away with enforcing them any further, even if things happen before we plug that hole. But that's not currently the state of the law, and so that's the very latest on Rogers retroactive versus retrospective and what it means if you're a consumer and somebody steals a million dollars by impersonating a Rogers technician. So that's the latest from the BC Supreme Court.
Adam Stirling:Legally speaking, we'll continue right after this on CFAX 1070. Legally speaking continues on CFAX 1070, as we're joined, as always, by Michael Mulligan, barrister and solicitor, with Mulligan Defense Lawyers Michael up next on the agenda. I'm reading it says Benzogate Nike shoes and a very large crooked nose, not enough to prove ID after the complainant passes away before trial. What is happening?
Michael Mulligan:Well, once again, nothing good. So this is a case actually out of Vancouver. It's an interesting fact pattern that deals with the challenges of identification evidence in criminal cases, which I must say is a, we know, a notorious source of convicting the wrong person. Right, it can just be hard to correctly identify the right person who's done something. This particular case was made more challenging and it's an assault case because the complainant in the case, for reasons unexplained, passed away prior to trial. So there's no.
Michael Mulligan:The Crown nonetheless proceeded with the charge on the basis that there was a video, like a security video, from two supportive housing buildings near where this event occurred, along with some photographs of the scene. Was whether this video recording of what transpired and some still frames from that, was sufficient to establish that it was the accused who committed the assault. It looked like an allegation of badly cutting somebody on the cheek or bad laceration on the cheek of the person. And what the Crown did in this case, or what the police did, is that they put up in the police station a notice about this, I guess with some pictures, still frames from it, asking whether any police officers there could recognize the person in the video or the still frames and one officer in the Vancouver Police Department said that, yes, they could identify who that person was. That person was arrested and charged, and so that police officer who had indicated that he had dealt with the accused on, I think, two or three prior occasions on one occasion he said that he dealt with him for jaywalking it was unclear what the other occasions were, but claimed that he had dealt with this person on some occasions, totaling 45 minutes said that he could identify that person as being the person in this video of the assault. And so that police officer came to court and testified that he was 100% certain that this was the same individual and was then questioned about some of the reasons of why he thought that. And so the judge had to analyze that issue. But whether that evidence, that kind of opinion evidence, was sufficient and I should pause here to say that generally in a criminal case, opinion evidence isn't permissible. Generally people can testify about things they saw or did not. An opinion like I think that's the guy. But there is an exception for some opinion evidence, called lay opinion evidence, on topics like, yeah, that's the same person, or that person looks drunk the kind of opinion that somebody with no special training might be able to give, and the threshold for that is simply whether it might be helpful. And so the judge found that, okay, that would certainly be helpful and so that's going to be allowed here.
Michael Mulligan:And then the judge identified some of the law concerning identification evidence and different types of it, and the judge pointed out there are at least three different kinds of identification evidence. Pointed out there are at least three different kinds of identification evidence. One kind of identification evidence is what's referred to as recognition evidence, which would be like somebody who knows a person well, like somebody looking at a video or seeing somebody and saying, yeah, that's my brother, right, with the idea that you're very familiar with, like how the person moves and looks and so on right, and that can be a more reliable type of identification evidence. There can also be identification evidence which is done through things like showing a lineup or like a sequential series of pictures right. But there's also a kind of identification evidence which amounts to eyewitness. Identification evidence by a stranger and that's the kind which long judicial experience has taught us is very inherently unreliable. And the judge found here that while this police officer had dealt with the accused on some previous occasions, it was for 45 minutes various circumstances where the officer didn't have a lot of detail about what they were like. He thought it might have been a jaywalking thing. He dealt with them on and he found that this was closer to the sort of you know stranger identification than somebody saying hey, that's my brother on the video or I just recognize how he, you know what he looks like here.
Michael Mulligan:There were some other challenges because the judge also looked very carefully at the video and very carefully at the man in court, and the judge concluded he could not determine that they were the same person by looking at the man in court and looking back and forth at the video, right, and furthermore there were some things and this can be critical some elements which don't seem to quite match up and one of the interesting things, I must say, I do this kind of work for a living. I'm not sure I'd ever heard this term before, but the judge said that on the video, the person on the video who committed the assault had a distinctive gait, like manner of walking, and he described it this way the person on the video, his gait is pronounced and distinctive. In the downtown east side this gait is known as benzo gait. It is a physical, hunch-like walking consistent with a drug addicts in the downtown east side Some people may have seen that, you know you sometimes see somebody who looks like they're certainly under the influence of something kind of hunched over, I think at the waist, in sort of an L-shape, walking along, physically hunched over, and the judge said look, that's what the person on the video looks like.
Michael Mulligan:And the police officer, who's familiar with the accused from the jaywalking and some other things, hadn't noticed anything unusual about his gait, on least on the occasions when he dealt with him. Another thing that the officer tried to rely upon is he said oh yes, when he had dealt with this man, he was wearing nike shoes, uh, which he described in a couple occasions as having a black swoosh, uh, and then later said hold on, no, no, I misspoke, a white swo, a white swoosh, a white swoosh. And so saying well, you know, the person in the video had a white swoosh on his shoes. And so the judge pointed out well, of course the officer had twice said that the person he dealt with had a black swoosh, before claiming he misspoke about that, but then also pointing out that, you know, this is probably a little bit of judicial notice that Nike shoes are pretty common and pointing out that all kinds of people wear them, the judge went on to say including world-class athletes, that maybe you can take judicial notice of that.
Michael Mulligan:So, in any case, with all of that, the judge said look, this just isn't enough, right, you might have persuaded him that probably it was the same person. Certainly there were some characteristics which look similar, but pointing out things like you know a person's nose or that they wore Nike shoes on some occasion, just wasn't enough to do it. There's nothing else connecting these people, right? And there's no complainant there, it's just this officer saying yeah, that's the person I think that I've dealt with on some other occasions. I'm really certain. But, as the judge correctly pointed out, the degree of certainty of a witness is not an indication of how reliable they are. Right. Somebody can be really, really sure, and that doesn't necessarily make it so, and so it's an example of how eyewitness evidence is used. And that interesting concept of the Benzo gate combined with Nike shoes just wasn't enough, and so the man was found not guilty. That's the latest from the provincial court.
Adam Stirling:Legally speaking, during the second half of our second hour every Thursday. Michael Mulligan, thank you so much as always.
Michael Mulligan:Thank you so much. It's always great to be here.