How to Handle Fraud, Identity Theft and Debt that isn’t Yours

One of the most common questions we get asked here at DebtAnswers Canada is, “Am I responsible for paying off a debt that isn’t mine?” Now this could refer to either of two completely different situations. The first scenario involves having credit taken out under your name with your consent, but used by someone else. This could include an old phone bill, credit card or even a vehicle. The second applies to credit that was taken out under your name WITHOUT your consent; or debt incurred by someone else with a similar name as yours, that is being mistakenly reported on your credit bureau report(s). Each situation has its own set of rules and guidelines, so let’s take a look at each scenario separately.

SCENARIO ONE: You’ve co-signed on a loan for an ex-partner, family member or friend, or you let them take out credit under your name. They’ve racked up quite a balance and now they won’t pay you back.

What do you do?

Unfortunately, the fact that you did not actually use any of the credit yourself does not matter as long as the credit is under your name, and you permitted the other person to use it. If you agreed to the debt being taken out under your name, even if you are just a co-signer, you are responsible for paying the entire balance, or risk having it negatively impact your credit report. Any late or missed payments will affect your credit score, and creditors may even take legal action against you if the payments fall too far behind. If the debt is under your name, the DebtAnswers Solution Finder can help you figure out your options for handling this debt.

SCENARIO TWO: You get a call from a collection agency for a debt that you are not aware of. You pull your credit report and discover that credit was taken out under your name WITHOUT your knowledge or consent.

What do you do?

This scenario is a little more complicated. If you follow the steps below, you will be in a better position to resolve the issue as quickly as possible. Keep a record of the dates of all actions taken, and the names and positions of anyone you speak to. Also, try to get as much of the communication as possible done in writing.

Step 1: Pull your credit reports from both Equifax and TransUnion.

Review them carefully to determine which debts are yours, and which ones are not.

Step 2: File a police report regarding any fraudulent debt.

Get the report number, name, badge # and phone number of the officer assigned to your case.

Step 3: Notify the credit bureaus.

Contact both Equifax and TransUnion to let them know that you have been a victim of identity theft. Ask them to put a fraud alert on your file. This will ensure that any future creditors will have to confirm your identity first (for example, by calling you) before any credit can be taken out in your name. Ensure that both credit bureaus have your correct personal contact information (address and phone number) on file.

Step 4: Ask the credit bureaus to remove any credit inquiries that you did not authorize.

A credit inquiry is done when a creditor pulls your credit report to decide whether to grant you credit. These will be listed under the Credit Inquiries section of your credit reports with Equifax and TransUnion, with each creditor will appearing as a requester. You may also see the names of collection agencies who pulled your credit report as a result of the fraud. Any inquiries associated with the fraudulent debt should be removed as they can have a negative impact on your overall credit score.

Step 5: If your bank account was defrauded in any way, notify your bank of the fraud.

Place stop payments on any outstanding cheques. Close your bank account(s) and open a new one with a new account number. Your debit card should also be replaced immediately.

Step 6: Contact the creditor and/or collection agency that is stating you owe the fraudulent debt.

Explain to them that you did not authorize the opening of this account, and provide them with all information regarding the police report. The creditor or collector will then refer you to their fraud department for further instructions.

Step 7: Follow-up with the creditor to ensure that the fraudulent debt has been removed from your credit bureau reports.

Then pull your credit reports from Equifax and TransUnion to ensure that the fraudulent debt and all associated credit inquires are no longer listed.

If you are having difficulty getting your credit bureau report(s) updated due to a lack of cooperation from the creditor or collection agency, contact your provincial Consumer Protection Branch for further information on how your can handle the situation.

Step 8: Take steps to protect yourself against future identity theft.

Pull you credit report once a month to check for signs of any unauthorized activity. If you feel that any of your existing credit cards may have been compromised, ask the creditor to send a replacement one with a new account number. Monitor your monthly statements for any suspicious transactions. Change the passwords for any of your online banking or credit accounts. Finally, keep any personal documents and information that can be used for identity theft safe from potential thieves. This includes your driver’s license, vehicle ownership, insurance documents, birth certificate, passport, SIN number, passwords, credit card numbers and banking information. Be wary whenever providing any of this information online.