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

When looking up his credit report earlier this year, Stéphane Hamel found out a car loan had been taken out in his name — from a bank he doesn't even do business with. 

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

The Quebecer, who moved to Alberta two years ago, was surprised to find out the loan referred to an address in Trois-Rivières, Que., which was unknown to him. He says the lender never bothered to verify.

Hamel might have avoided this exposure to fraud if he hadn't relocated. Quebec is the only province where consumers can freeze their credit — an easy way to protect against identity fraud by blocking access to your credit report, so fraudsters can't open credit card accounts or take out loans. 

Credit freezes are "very useful and effective" says anti-fraud consultant Vanessa Iafolla, especially in the wake of a growing number of data breaches, like the recent Ticketmaster incident which exposed customers' credit card information. 

"When you have this much access to personal data, identifiable information, fraudsters can very easily get at the necessary information to secure credit products. So a credit freeze basically puts up a moat," said Iafolla, from Anti-Fraud Intelligence Consulting, based in Halifax.

"And the reason why that is so deeply important when it comes to preventing fraud is that, by the time people usually figure out that their credit has been accessed, it's too late."

WATCH | Why a credit freeze can be effective against identity fraud: 

Someone took out a $25,000 loan in his name. A credit freeze could have helped

3 months ago

Duration 2:03

Credit freezes are one easy way to protect against identity fraud by blocking access to your credit report, but Quebec is currently the only province where consumers have access to the service.

It was the Desjardins data breach — revealed in 2019 and affecting roughly 9.7 million people and businesses — that prompted Quebec to enact legislation last year forcing credit agencies such as Equifax and TransUnion to offer credit freezes to its residents, free of charge.

Elsewhere in Canada, even a paid subscription to credit monitoring services does not include security freezes. 

But this measure, if offered across the country, would effectively prevent a scenario where a bank would grant a loan to the wrong person, Hamel says.

"I would rather see my credit refused occasionally because I forgot to unlock it rather than seeing a $25,000 loan appearing on my report, impacting my credit score, and the stress and the time it takes to fix it," he said.

Added cost for credit agencies

Equifax says credit freezes are only offered in Quebec because of its Credit Assessment Agents Act. 

"One exception to note is a scenario where an individual locks their Equifax credit report while they are a resident of Quebec and they subsequently move to a different province or territory," spokesperson Heather Aggarwal said via email. 

"That individual would have the ability to unlock their Equifax credit report after their move."

However, once the credit freeze is removed, it cannot be applied again, unless the customer resides once again in Quebec, she said. 

Neither Equifax nor TransUnion would explain why they do not extend that protection to the rest of Canada. 

But Iafolla says setting up security freezes is an added cost for credit agencies, who often don't act unless prompted by legislation. 

Canada's privacy commissioner and the federal government say it's up to provinces, which have jurisdiction, to enact their own laws. 

Ontario could be the first to follow suit. 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, again free of charge.

"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 bring many of these legislative changes into force, he added. 

Only a handful of other provinces — British Columbia, Saskatchewan and Nova Scotia — told CBC News they are currently looking into credit freezes. The rest either say they do not intend to force credit agencies to offer them or that they have not looked into this issue. 

How to protect your credit? 

Some Quebecers have said on social media that accessing the free option on the credit agencies' websites isn't straightforward, and experts warn that using a search engine might inadvertently lead residents to signing up for a subscription.

Anti-fraud specialist Simon Marchand says credit freezes certainly add another level of difficulty for criminals, but that they're not a guarantee against their increasingly sophisticated efforts. 

Motivated fraudsters are finding new ways to access credit, whether by creating new credit card accounts with stolen identities or by taking over existing accounts. By swapping the SIM card of a victim's cellphone, for instance, they can hijack their phone number and access their calls and two-step verification codes, he said.

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

"Go through everything on your report, the number of inquiries, what accounts are listed on there just to make sure that everything is actually yours," he said.

It's a "very great habit to get into to protect yourself from the situation snowballing into something that could be very overwhelming."