The Canadian tech company that changed its mind about using your tax return to sell stuff

As the deadline to make contributions to retirement plans such as RRSPs looms for Canadians, a changeto a popular piece of Canadian tax software means some of its customers might not like where or how their private data is being used.

SimpleTax, founded in Vancouver, has been certified by the Canada Revenue Agency to electronically filetax returns since the 2012 tax season. The company operates on a "pay what you want" basis, sometimes called donationware. Essentially, you can pay whatever you like to use SimpleTax, whether that is $5, $50 or nothing at all.

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It's currently one of several online or software applications the federal agency's website refers Canadians to if they are looking for a digital way to complete their taxes.

For years, the SimpleTax terms and conditions used plain language to explain that your personal information, such as the financial and demographic information you enter into your tax return, is not for sale.

Vancouver programmer Jeff Sagal found that promise appealing. He was one of multiple SimpleTax clients who spoke to CBC Radio'sThe Cost of Livingabout the software. The easy-to-understand privacy policy was a key selling point.

"I did look at their privacy policy the first time that I used it and I was pretty impressed by the fact that they not only mentioned encryption in it [they] were incredibly transparent about the fact that they had no access to your information whatsoever," said Sagal.

In late 2019, the tax software startup was acquired by another Canadian company in the world offintech or financial technology WealthSimple. The company offers savings and investment products,including registered retirement savings plans or tax-free savings accounts.

Owners change, asdo the promises they make

Following the WealthSimple acquisition, SimpleTax's terms of service changed.

"We will never, ever sell" your data was no longer a promise.

WealthSimple declined an interview request from CBC Radio, but in an emailed statement saidgiving users control over their personal information is a priority for the company.

"The recent changes made to our Privacy Policy are the first step in providing users with a better SimpleTax service for the 2019 tax year," wrote Peter La.

The company sentan email alerting all clients to the change in its privacy policy in early January.

As of February 2020, user profiles on SimpleTax appear to allow the company to access tax return data even when a user is not actively completing a tax return, however, the option to opt-out is available if desired.

Why the change?

According to WealthSimple's emailed statement, the company wants to "implement further measures within the [SimpleTax] product to obtain user consent for advanced product features."

Given that the company offers investments directly related to tax returns, such as RRSPs and TFSAs, a customer database that includes demographic information on Canadians and their plan contribution limits could provide sales and marketing leads.

WealthSimpledid not provide information on how large the SimpleTax customer base is when asked by CBC Radio.

According to Dana DiTomaso, president of digital marketing agency Kick Point, the language change may have been necessary regardless of WealthSimple's plans for SimpleTax.

"[The older language was] a really vague terrible way of phrasing things in a privacy policy, because [it said] we will never ever sell your data, but they sold the company which technically contains the data," said DiTomaso.

Selling the company is selling the data

While SimpleTax and WealthSimple have continued to maintain on social media that client data is not for sale, posting statements like"neither Wealthsimple or SimpleTax have ever, or will ever sell your data" after that same line was fully removed from theprivacy policy and terms of service.

However, as DiTomaso pointed outbecause the company SimpleTax itself was sold, the personal data of its clients was technically sold along with it.

You can get in trouble with these kinds of privacy policies- Dana DiTomaso, digital marketing expert

DiTomaso, who is also a technology columnist for CBC Radio,described the old privacy policy as "friendly and personal" but not necessarily sound business practice.

"You can get in trouble with these kinds of privacy policies, so the fact that they updated it after the acquisition totally makes sense," said DiTomaso.

Has the marketing started?

The SimpleTax website is already showing ads suggesting Canadians "put your tax refund to work with WealthSimple."

Tax returns contain information that includes RRSP contributions, pension plan contributions, income over multiple years, overseas investments, home ownership, marital status, how many children you have or whether anyone in a family is disabled.

This could providea huge trove of data for an investment company such as WealthSimple to createtargeted advertisements.

SimpleTax customers expressed concern on social media including multiple threads on Reddit.

"I can't think of any reason why you would remove that line unless somewhere down the line in the future you were looking to make some profit off of the data," said Jeff Sagal, who has not yet decided if he'll continue using SimpleTax for the 2020 tax year.

Written and produced by Anis Heydari. Reach him at anis@cbc.ca or tweet @BetamaxRob.
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