On March 8, 2007, at the Inn at The Forks, we hosted an event called “Identity Theft: How to Protect Yourself”. Sixteen years later, identity theft is more prevalent than ever.
A client recently shared her story of identity theft with us, here’s what happened in her words.
Quite some time ago I registered for a Credit Karma account. This is the front-end retail account that provides access to your TransUnion credit report. By signing up you can access your report for free. In return for free access, they show you what credit cards you qualify for – a roundabout sales tool. I check it periodically but Credit Karma also sends alerts when my credit score goes up or down so that I can log in and review it at any time (or, as they hope, sign up for another credit card).
On March 14th, I received a message that my score had gone down. But why? My bills were all paid, and I had not applied for credit, so what could have caused the change? After logging in to check it out I discovered a “hard” credit inquiry, which I did not authorize. I quickly searched out what to do next and found that I needed to submit a dispute, which meant registering for yet another account directly through TransUnion. I did everything I was supposed to and then breathed a sigh of relief “Whew, that’s taken care of!” Until…
On March 30th, I found a letter from motusbank in my mailbox alerting me to the fact that they had closed my account. I had never heard of motusbank so first had to verify they were for real before calling to ask what this was all about. I found them listed on the Canadian Bankers Association website. Before callingI verified that the phone number on the letter matched the contact information on their website. The agent said there must have been a fraudulent application to open an account, so they closed it and were required to send a letter notifying me. The agent thought the credit investigation on my TransUnion report might have been the flag that alerted them to shut it down.
Now I needed to dial in. I went through a similar process with Equifax and submitted a police report. Hours of work to hopefully stop these identity thieves in their tracks. It was all coming together – I suspect the thieves were attempting to get credit in my name. When they were able to receive the funds from lenders, they planned to deposit the money into a bank account (also in my name). Had the thieves been successful and I not aware, this could have gone on a while. But when those loan payments were inevitably missed, the lenders would be looking for the real ME to pay!
I am sharing my story because I was doing all the right things and I was still the victim of identity theft. I want others to know that checking your credit periodically is essential if you want to protect yourself. And, when you catch criminal activity, there are steps you can take to stop identity thieves in their tracks.
Credit Bureaus in Canada
If you’re not already aware of how the credit bureaus work, here’s a rundown. There are two credit bureaus in Canada, TransUnion, and Equifax. These bureaus follow your credit history and provide a score based on how well you service your debt. If you’re late with a payment, it will be reflected in your score. To have an excellent score, you need to have had several lines of credit for a long period and have managed it well. Your report also tracks inquiries. When you apply for credit from a lender, they will conduct a credit check. A hard credit check will affect your score while a soft credit check may show up on your report but does not affect your score.
Hard vs Soft Credit Inquiries
When you apply for credit in Canada, whether it’s a credit card, a loan, or a mortgage, the lender will usually check your credit report to assess your creditworthiness. This is where the concepts of hard and soft credit inquiries come into play.
A soft credit inquiry, also known as a soft credit check, is a type of credit check that doesn’t affect your credit score. Examples of soft credit inquiries include when you check your credit report or when a lender checks your credit report as part of a pre-approval process. Soft credit inquiries may also occur when companies like credit bureaus or potential employers check your credit report.
On the other hand, a hard credit inquiry, also known as a hard credit check, is a type of credit check that can impact your credit score. Hard credit inquiries happen when you apply for credit, such as a credit card or a loan, and the lender checks your credit report to assess your creditworthiness. Hard inquiries may also occur when you apply for a job that requires a credit check or when you rent an apartment and the landlord runs a credit check.
It’s important to keep in mind that while a hard credit inquiry may temporarily lower your credit score, the impact is usually minimal and short-lived. However, if you have too many hard inquiries on your credit report within a short period, it could be a red flag to potential lenders, as it may indicate that you’re applying for credit more frequently than your income level can support.
How to Avoid Identity Theft
- Do your best to keep your personal information private. This includes your date of birth, credit card numbers, bank accounts, and very importantly your social insurance number.
- Collect your mail from the mailbox as soon as possible.
- You will need to share some of the above information at certain times, so be careful with whom you share it. Do not share over email, text, or phone with an unknown caller, and ask questions before providing your information.
- Use difficult passwords and change them regularly. You might want to consider a password manager to help keep your passwords organized. Visit our Secure Send page for more information on cyber security.
- You can register for one or more free accounts to keep an eye on your credit :
- Credit Karma (the retail account that provides a view of your TransUnion credit report and also provides credit cards you may want to acquire).
- Equifax (you may now sign up for a free report (updated monthly) directly through Equifax.
- Borrowell (a retail account that provides access to your Equifax account. In exchange, they provide product recommendations. There are a few more bells and whistles with a Borrowell account including an AI-powered Credit Coach named Molly.)
- Make it a habit to check your bank, credit card, and credit bureau accounts regularly. Review your accounts more often if you’re aware of criminal activity.
No matter how careful you are, there is always a chance your data could end up in the hands of the wrong people. If this happens, be prepared to act quickly.
What to do if you become aware of identity theft
Don’t panic – take control quickly!
- Contact both credit bureaus to dispute unauthorized hard credit inquiries and place a fraud alert on your accounts. The fraud alert will direct lenders to contact you by phone before granting credit in your name. Once this alert is put on your accounts it lasts for 6 years. You can take it off at any time or renew the alert after 6 years have passed.
- Notify your financial institutions, banks, and lenders and contact us. In some cases, we have changed investment account numbers as a precaution.
- Change your passwords.
- File a police report in your local area. In Winnipeg, go to Report a Crime Online.
- You can also report to the Canadian Anti-Fraud Centre (CAFC), an investigative body made up of the RCMP, the Competition Bureau of Canada, and the OPP.
If you have any questions, be in touch!
The information in this commentary is for informational purposes only and not meant to be personalized financial planning advice. The content has been prepared by the team at Fraser & Partners from sources believed to be accurate.
