What is Credit Fraud Alert?

What is Credit Fraud Alert?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated April 22, 2022

Do you have unknown charges on your bank statements or new phone bills you’ve never applied for? Or perhaps you’ve found unfamiliar accounts on your credit report? These are telltale warning signs of identity theft: a very terrifying but very real problem millions of Canadian face. Question is, how can you protect yourself from identity theft and what happens if you’re a victim? 

Identity Fraud In Canada

When you’ve been a victim of identity theft, it means someone out there has access to your personal information and is using it for criminal purposes. They may have access to certain pieces of information such as your name, address, date of birth, your driver’s license number, your credit card details and even your SIN. With access to such information, they have the capacity to commit several criminal acts against you, including: 

  • Creating new accounts in your name. It can range from something as simple as a new phone account to new credit cards, loans and even mortgages.
  • Take out multiple loans through online lenders.
  • Use your identity to buy a new car.
  • Use your credit or debit card accounts to make purchases unbeknownst to you.

Criminal acts like these can be extremely damaging to your credit health, making it difficult for you in the future when you want to apply for a loan or new credit account that requires a credit check. It can also lead to an incredible amount of debt which will land you in a nightmare of paperwork to try and prove you’ve been frauded. 

What Is Credit Fraud Alert? 

Fraud alert is a service you pay for to help protect yourself from identity theft and financial fraud. When you place a fraud alert it adds a notice to your credit file to alert companies that your personal information may be compromised. This encourages companies to take extra steps to verify your identity when opening an account under your name, which in turn makes it more difficult for an identity thief to commit fraud. 

How Does Fraud Alert Work? 

In Canada there are two national credit bureaus you can place an alert with; Equifax and TransUnion. Placing a fraud alert on your credit file with these credit bureaus will inform lenders and creditors of your situation and that they should take extra measures to identify you, such as calling you before offering credit. 

For example, when you apply for a personal loan, a mortgage, a car loan, or even a new credit card, companies will check your creditworthiness as a way to gauge your likelihood to repay what they lend to you. This is when the fraud alert will come into play. When lenders go to check your credit file, they will see the fraud alert on your account and know that they must take extra precautions to confirm you are who you say you are.

How Do You Place A Fraud Alert In Canada? 

Each credit bureau has its own processes when placing a fraud alert on your credit file. As mentioned before there are two national credit bureaus in Canada: Equifax and TransUnion. When placing a fraud alert on your file you should consider placing it with both credit bureaus as some lenders only check in with one credit bureau. By placing an alert with both the credit bureaus you’re increasing the chances of catching any fraudulent activities. 

Placing Fraud Alert With Equifax

There are two types of alerts you can place on your credit report with Equifax: Identity Alert and a Fraud Warning.  

Fraud Warning

Fraud warning (aka fraud alert) is only available to those who have been a victim of identity theft or fraud. It stays on your credit report for 6 years and is completely free to place. You can place a fraud alert with Equifax by contacting their customer service at the toll-free number 1-800-465-7166. You’ll need to provide some personal information, so, be ready to answer questions regarding your identity, including your SIN, address and date of birth. 

Identity Alert 

An identity alert is only available in Manitoba and Ontario and requires the lender or creditor to call you before extending you any credit. This alert will remain on your credit report for 6 years, unless you specifically request (must be in writing) it to be removed. 

To place an identity alert on your Equifax credit report, you’ll need to provide certain documentation to validate your identity and address. You can place an identity alert, by calling their automated line at 1-800-465-7166 or by sending a request by mail. 

Placing Fraud Alert With TransUnion

If you believe your identity has been stolen, you can place a Potential Fraud Warning on your credit report for a $5.00 fee. For an extra $1.00, you can also place an alert on your Social Insurance Number (SIN). To place a warning 

You can place a fraud alert on your credit file with TransUnion by either creating an account online through their website or by completing their form called “Mail Request for Potential Fraud Warning on my credit file”. You’ll also need to photocopy a piece of ID when submitting the form. You can also place an alert on your file by simply calling TransUnion at 1-800-663-9980 and providing some personal information.

How To Protect Yourself From Identity Theft 

Understanding how these criminals gain access to your personal information is one way of taking proper actions that will protect you. Typically, information is gathered through data breaches, hacking, malware attacks, dumpster diving,  or by stealing your mail, wallet or purse. So how do you keep yourself safe from it all? There are many ways to protect yourself from identity theft, some of which may seem obvious but, it’s always a good reminder.

  • Don’t carry your SIN card or any extra credit cards when you go out. Leave them at home.
  •  Don’t give your SIN, passwords, or other personal information that can lead to identity theft to people who email or call you.
  • Use a shredder when discarding personal or confidential information. 
  • Double-check your bill statements to make sure all transactions are yours.
  •  Protect your computer – do not download anything from someone you do not know or trust.
  • Monitor your credit report for any suspicious activity.

By taking these precautions in your everyday life, you will reduce your chances of identity theft. But as you know, these methods aren’t foolproof and sometimes data breaches are out of your control. So, despite your best efforts, you may still find yourself a victim of identity theft. Adding a fraud alert to your credit file is a solid way of creating your own “firewall” against it. 

Lookout Is Credit Monitoring A Good Way To Protect Your Identity?

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How To Deal With Fraud Issues And Identity Theft

If you realize too late and are now a victim of identity theft, there are some steps you can take to prevent any further damage to your credit report and name. 

  1. Contact your local authorities and report the theft of your identification. This will be the proof you provide your banks to erase any unauthorized debt taken under your name. 
  2. Contact your financial institutions and file an Identity Theft Statement. By doing so they can start an investigation into any fraudulent charges.
  3. Change your passwords.
  4. Call both TransUnion and Equifax to place a fraud alert on your credit file and to obtain your credit report to check for any further suspicious activities.

Credit Fraud Alert FAQs

Is fraud alert free?

You can place a fraud alert for free with Equifax but Transunion charges a fee of $5. 

Does placing a fraud alert hurt your credit?

No, placing a fraud alert on your credit report has no impact on your credit scores. 

Will monitoring my credit report help stop identity theft? 

Monitoring your credit can’t stop identity theft, but it can help you detect any suspicious activity and take action against any fraudulent activity. 

Bottom Line

Understanding what a fraud alert is and how to place one on your credit file is the information you need to take quick actions to defend yourself against potential identity theft. This is especially pertinent as identity theft can lead to huge debt, bad credit, and even bankruptcy. Taking precautions in your everyday life like updating passwords, and regularly checking your bank statements and credit report are greats ways of preventing it altogether.

Rating of 3/5 based on 2 votes.

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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