Credit freezes help stop identity fraud — so why are they only offered in Quebec?

When Stéphane Hamel checked his credit report earlier this year, he was shocked to discover a car loan for $25,000 had been taken out in his name from a bank he had never dealt with.

"I ended up... with a $25,000 loan that I never asked for," Hamel told CBC News.

The Quebec native, who relocated to Alberta two years ago, was even more surprised to find the loan linked to an address in Trois-Rivières, Que., a place he had never been associated with. He said the lender had failed to verify his identity.

Hamel's exposure to this type of fraud might have been avoided had he not moved. Quebec is the only province in Canada where consumers can freeze their credit, a simple and effective measure that blocks access to credit reports, preventing fraudsters from opening credit card accounts or taking out loans.

Credit freezes are "very useful and effective," according to anti-fraud consultant Vanessa Iafolla, particularly given the increasing number of data breaches, such as the recent Ticketmaster incident that exposed customers' credit card information.

"When there's this much access to personal data and identifiable information, fraudsters can easily obtain the necessary details to secure credit products. A credit freeze essentially puts up a moat," said Iafolla, from Anti-Fraud Intelligence Consulting in Halifax.

She emphasized that credit freezes are crucial for fraud prevention because, by the time most people realize their credit has been compromised, it's often too late.

The 2019 Desjardins data breach, which affected about 9.7 million people and businesses, prompted Quebec to pass legislation last year requiring credit agencies like Equifax and TransUnion to offer credit freezes to residents at no cost.

Outside of Quebec, even paying for credit monitoring services does not include the option for security freezes.

Hamel believes that if this measure were available nationwide, it could prevent situations like his, where a bank mistakenly grants a loan to the wrong person.

"I'd rather occasionally have my credit denied because I forgot to unlock it than see a $25,000 loan appear on my report, damaging my credit score and causing stress and time to resolve," he said.

Added Costs for Credit Agencies

Equifax explains that credit freezes are only available in Quebec due to the Credit Assessment Agents Act.

"An exception occurs when someone locks their Equifax credit report while residing in Quebec and later moves to another province or territory," spokesperson Heather Aggarwal explained via email. "That person can unlock their Equifax credit report after relocating."

However, once a credit freeze is lifted, it cannot be reapplied unless the individual returns to Quebec.

Neither Equifax nor TransUnion has clarified why they do not extend this protection across Canada. Iafolla suggests that implementing security freezes represents an added cost for credit agencies, which often only take action when required by law.

Canada's privacy commissioner and the federal government indicate that it is up to individual provinces, which have jurisdiction, to enact their own laws on this issue.

Ontario may be the first to follow Quebec's lead. In December, the province amended its Consumer Reporting Act to provide Ontarians with free access to their credit reports and the ability to add or remove a security freeze at no cost.

"This will help prevent the harms that can be caused by identity theft," said Jeffrey Stinson, communications adviser for Ontario's Ministry of Public and Business Service Delivery and Procurement. The ministry plans to hold consultations "in the near future" to develop the rules needed to implement these legislative changes, he added.

Only a few other provinces—British Columbia, Saskatchewan, and Nova Scotia—told CBC News they are currently exploring credit freezes. The remaining provinces either have no plans to require credit agencies to offer them or have not examined the issue.

Protecting Your Credit

Some Quebec residents have reported on social media that accessing the free credit freeze option on credit agency websites can be challenging, with experts cautioning that using a search engine might inadvertently lead to signing up for a paid subscription.

Anti-fraud expert Simon Marchand notes that while credit freezes add a layer of protection, they are not foolproof against increasingly sophisticated criminal tactics.

Determined fraudsters continue to find ways to access credit, either by creating new credit card accounts with stolen identities or by taking over existing accounts. For example, they can swap the SIM card of a victim's cellphone to hijack their phone number and access calls and two-step verification codes.

Jeff Horncastle from the Canadian Anti-Fraud Centre advises checking your credit reports at least once a year, especially if you live outside of Quebec.

"Review everything on your report—the number of inquiries, the accounts listed—just to ensure that everything is genuinely yours," he said. "It's a very good habit to develop to protect yourself from a situation that could quickly spiral out of control."