Editorial – Identity Theft: Consumers deserve free credit protection

PHOTO CREDIT: Jay Zhang (Unsplash)

The most effective way to protect against identity theft is a security freeze, a procedure that basically locks the consumer’s credit file. It’s a mode of protection that exists in the United States, but not in Canada. Fortunately, this situation might be about to change, at least in Quebec. In fact, the National Assembly is currently studying a bill aimed at instituting a security freeze.

Before it’s adopted, however, the draft legislation—Bill 53–is going to need some improvements. A report authored by Option consommateurs has a few interesting recommendations to make in this regard.

The Bill provides that a security freeze would apply only in connection with a credit agreement or a long-term property lease. This is insufficient. Fraudsters use stolen personal information to gain access to several types of contracts, including cell phone contracts. To be effective, therefore, the security freeze would have to apply to all types of contracts, with certain exceptions when deemed necessary.

The Bill also covers fraud alerts. If passed, it would require all lenders and businesses to take “reasonable steps” to verify the identity of their customers. That is not enough. They should also be obliged to contact them. This is especially important because, as was demonstrated in a CBC report aired in February 2019, the measure as currently implemented is far from effective.

Bill 53 also lays down the framework for the explanatory statement that could be placed in the credit file. However, it specifies that the statement may only be used in certain cases of disagreement. However, a statement of this type could be useful in many other instances, such as when a consumer want to justify a bad score in her credit file. Here again, Option consommateurs believes, adjustments are called for.

Not least of all, the proposed measures are not offered free of charge: credit bureaus are merely requested to charge consumers “reasonable fees.” Option consommateurs considers this unconscionable, and with good reason. Even a small fee might be too much for many low-income people, yet the consequences of having a bad credit report are dire. People who find themselves in this situation may have no access to credit or insurance; they may also have difficulty finding accommodation or employment.

There is another reason why consumers should not be expected to pay. They are being held hostage in every possible way. They cannot obtain credit or purchase certain goods or services unless they provide personal information or access to their credit file. Recent high-profile data theft cases make it clear that those who require your personal information are not always able to keep it safe. In such a context, giving all consumers access to every mechanism available to protect themselves is the least that should be done. And asking them to pay for it is an aberration.

In Ontario, a bill providing for a free security freeze received Royal Assent in 2018, while the Liberals were still in power. The Ford government scrapped it, however.