Two problems that often arrive together
Loan fraud and identity theft are related harms. Loan fraud happens when someone tricks you into paying for a loan that does not exist or takes a loan in your name, while identity theft is the misuse of your personal details to open accounts or make purchases. A single scam can produce both.
Loan fraud you may face
- You pay a fee for a loan that is never paid out.
- A fake lender collects your documents and banking details.
- Someone else applies for a loan using your identity.
- A cheque or deposit appears in your account, and you are asked to return part of it.
Identity theft you may face
A thief uses your name to open cards, lines of credit or phone accounts. The first sign is often a collection letter, a rejected application or an unfamiliar item on your credit report. The Canadian Anti-Fraud Centre collects information on both fraud and identity theft.
Signs that something is wrong
Early detection reduces losses, so know the signals.
On your finances
- Bank or card transactions you do not recognize.
- A lender contacts you about a loan you never requested.
- Bills or statements stop arriving, which could mean someone changed your address.
- You are refused credit unexpectedly.
On your credit report
- Accounts you did not open.
- Inquiries from lenders you never contacted.
- Unfamiliar addresses or employers.
- Collection accounts for unknown debts.
On your phone or email
Unexpected verification codes, password reset emails or messages saying a new device signed in can show someone is trying to take over an account. Do not share codes with anyone who calls you.
Illustrative example
A renter checks her credit report before applying for an apartment and finds a $3,200 line of credit she never opened, with two missed payments. This is the kind of discovery that prompts a fraud report. The case is invented for illustration.
The first 24 hours: immediate steps
If you have lost money or shared sensitive information, move in a sensible order. You do not need to do everything in a single hour, but the first steps matter.
- Stop all contact with the person or business involved, and do not send any more money.
- Save evidence: messages, emails, receipts, screenshots, phone numbers, website addresses and payment details.
- Call your bank or card issuer, explain what happened and ask about blocking the payment, changing account numbers or reissuing cards.
- Change passwords and turn on two-step verification for your email, banking and phone accounts.
- Contact the police and keep the report number.
- Report the fraud to the Canadian Anti-Fraud Centre.
If your documents were shared
If you provided a driver's licence, passport or Social Insurance Number, add this to your notes. Some documents can be replaced, and the issuing agency can tell you how. Keep proof of the loss with your records.
Contacting the credit bureaus
Both Equifax and TransUnion hold your file, and a fraudster's activity may appear in one or both. Order both reports, which you can do online at no cost, and review every account and inquiry.
What you can do
- Dispute any account or inquiry that is not yours. TransUnion's consumer service lets you create a dispute online.
- Add alerts to your file. TransUnion's service allows this, and Equifax lists alert products on its consumer page, some of which require a paid plan.
- Add a consumer statement if information is correct but needs context. TransUnion allows up to 100 words, or 200 in Saskatchewan.
- Ask each creditor involved to close fraudulent accounts and to confirm in writing that you are not responsible.
Expect a back-and-forth
Bureaus and creditors may request additional proof or ask you to complete their own fraud forms. Respond promptly and keep copies. If a creditor says it will investigate, ask for a timeline and for written confirmation when it concludes.
Documents to attach
Include the police report number, identification, a short written explanation and any evidence that the account is not yours, such as a letter showing you lived elsewhere when it was opened.
How long items last
Accurate negative items may stay on a report for years, for instance late payments for up to six years. An account that is proven fraudulent should be removed, which is why documentation matters.
Reporting the fraud and what to expect
Reports serve two purposes: they create a record you can use with banks and bureaus, and they help investigators see patterns. Do not expect immediate recovery of money, but do expect a paper trail.
What to put in a report
Be ready to describe what happened in order: how you were contacted, what you were promised, what you sent, when and by what method, and what personal details you disclosed. Include the names, phone numbers, email addresses, website addresses and account numbers you were given, even if you suspect they are false. Details that look minor, such as the wording of a text message, can help link your case to others.
Where to report
- The Canadian Anti-Fraud Centre, which collects fraud and identity theft reports and offers guidance on what to do after becoming a victim.
- Local police, especially if money was lost or documents stolen.
- Your bank or card issuer, as soon as possible.
- The provincial consumer protection office, if a licensed lender or collector acted improperly.
- The Better Business Bureau scam tracker, to warn others.
Beware of recovery scams
After a loss, you may be contacted by someone who claims to be able to recover your money for a fee. The Canadian Anti-Fraud Centre warns that fraudsters impersonate its staff and says it does not contact individuals to request money. Treat such offers as a second attempt at fraud.
Be realistic
Funds sent by cryptocurrency, gift cards or wire are rarely recoverable. Debts opened in your name, however, can usually be disputed.
Repairing the damage and rebuilding confidence
Recovery takes weeks or months, depending on how many accounts were affected. Keep a log of every call and letter, including dates, names and outcomes, and follow up in writing.
A recovery checklist
- Confirm that fraudulent accounts are closed and removed from your credit file.
- Reorder both credit reports after a month and again after three months.
- Replace compromised cards, passwords and identification where needed.
- Watch bank statements for small test charges.
- Ask your employer, landlord or other organizations to correct any records that carry wrong details.
Debt collectors and false debts
If a collector contacts you about a debt you did not incur, respond in writing, deny the debt, attach your police report number and ask for proof. Do not make a partial payment as a goodwill gesture, because it may be treated as acknowledging the debt.
Prevent a repeat
Once the immediate steps are done, tighten your habits. Use a different strong password for each important account, keep your phone number and email secure, and be cautious about unsolicited offers. Review your credit reports at least once a year, since early detection is the best protection against a second incident.
Look after yourself
Victims often feel embarrassed or anxious. Speaking with a trusted person helps. A non-profit credit counsellor can help you plan finances if a loss has strained your budget, and 2-1-1 can connect you with community support.