The federal privacy watchdog says Canada Post is breaking the law by gleaning information from the outsides of envelopes and packages to help build marketing lists that it rents to businesses.

The office of privacy commissioner Philippe Dufresne says information collected for the marketing program includes data about where individuals live and what type of online shopping they do, based on who sends them packages.

The commissioner found Canada Post had not obtained authorization from individuals to indirectly collect such personal information.

In a report on his offices investigation, Dufresne says this amounts to a violation of section 5 of the Privacy Act.

The commissioner recommended Canada Post stop using and disclosing personal information in this way until it can seek and obtain consent from Canadians.

Dufresnes report says the post office disagreed with his conclusion and declined to take the corrective action.

The investigation findings were tabled in Parliament this week in tandem with the commissioners annual report.

The case began when a man received marketing material from a Toronto restaurant with his name and full apartment address on the envelope, including the suite number.

Upon making inquiries, the man discovered he had received the material through the post offices Smartmail Marketing Program, which arranged a mail campaign for the restaurant.

Dufresnes office began investigating after receiving a complaint from the man.

Under the program, Canada Post engages mail service providers that prepare and send direct mailouts to customers. Although not all campaigns include recipients full addresses, Canada Post marketing information indicates people are more likely to open addressed mail than unaddressed mail, Dufresnes report says.

Mail service providers are prohibited from disclosing mailing lists to advertisers, and must safeguard the information and dispose of lists once a campaign is over.

Canada Post says it can prepare marketing lists based on 1,200 available targeting attributes such as marital and family status, ethnicity, interests and hobbies.

The post office stressed to the commissioners office it must continually innovate and find new ways to diversify its revenue streams as regular mail volumes decline. It also said research indicates that consumers enjoy receiving relevant marketing offers by mail.

The privacy commissioner disagreed, saying in his report that not all Canadians would see the monetization of their personal information in such positive terms.

Further, Canada Post argued that it has the permission of Canadian households to deliver mail to their addresses, and to request re-permission to deliver their mail would be absurd.

The post office also suggested that individuals could opt out of the program via the Canada Post website and, in not using the opt-out, people implicitly authorize the use of their personal information for the marketing program.

The commissioner rejected these arguments as well.

As a result, the watchdog recommended the post office cease using and disclosing personal information for mail marketing activities without seeking consent from individuals.

Canada Post rejected the commissioners call, instead moving to improve the clarity of information on its website about its use of personal information, increase the visibility of the opt-out mechanism and add a related brochure to its retail outlets.

The commissioner said it appreciates the commitment to improve transparency, as information about the post offices use of personal information in the program and the related opt-out mechanism are currently difficult to find and incomplete.

However, in our view these measures do not constitute obtaining authorization from individuals as required by section 5, and therefore do not correct the contravention of the Act.

The commissioner invited Canada Post to consider potential options to obtain authorization, such as by contacting individuals by mail, but the post office suggested this would not be effective.

Asked about the report, Canada Post said Wednesday it has told the commissioner we are looking at ways to better inform Canadians on how their mailing data is utilized, while outlining their options.