Concerns about identity theft have resulted in recent amendments to Ontario’s Consumer Reporting Act, which came into force on January 1, 2008. In certain situations, credit grantors will be required to take additional steps prior to completing a transaction with an individual. The amendments allow for an individual to have a ‘fraud alert’ notice put in a credit file that a consumer reporting agency (CRA) maintains about him or her. If a business conducts a credit check on that individual and discovers a fraud alert in his or her file, the business shall not proceed with the transaction without taking reasonable steps to verify the identity of the person involved in the transaction.
The alert that a consumer may require a CRA to include in his or her file will warn persons to verify the identity of any person purporting to be the consumer. The fraud alert in the CRA’s file will include a telephone number or method of contacting the consumer to verify the identity of a person purporting to be the consumer. The CRA is required to take reasonable steps to verify the identity of the person requesting the alert before placing it in the consumer’s file.
If a business conducts a credit check that reveals a fraud alert in the consumer’s file, the business is not to proceed with certain prescribed transactions involving someone purporting to be the consumer without taking steps to verify the identity of the person. The Act and associated regulations provide that such steps are required where the transaction with the consumer involves:
- the extension of credit or the loaning of money (including an increase in an individual’s open credit limit, the issuance of additional credit cards or the lending of money on the security of a mortgage);
- the purchase, assignment or collection of a debt of the person;
- a tenancy agreement involving the person;
- an agreement for the purchase, lease or rental of goods or services involving the person;
- an employment arrangement of the person; or
- the underwriting of insurance involving the person.
A fraud alert in the CRA file will expire six years after it is included in a consumer’s file or upon the consumer’s earlier request.