Northwestel security deposits punish entire community: customer

A Cape Dorset customer, with a good credit rating, was still charged a security deposit from Northwestel to get a new landline telephone because the community of Cape Dorset suffers from a poor credit history, as reported by Equifax Canada, which does credit checks for Northwestel. (FILE PHOTO)

A new Northwestel telephone customer says the company’s security deposit policy in Nunavut is unethical and discriminatory.

When Jordanne Amos moved to Cape Dorset a few weeks ago, she set up a landline telephone with Northwestel. As part of the process, the company ran a credit check.

“They said based on my credit check, I would have to pay a security deposit,” Amos said.

Northwestel charged Amos a $150 security deposit that would be refunded after six months of timely payments.

But Amos said she was sure she had a good credit history, and decided to do her own credit check. Sure enough, her personal credit rating was just fine.

When she contacted Northwestel with her credit score, a customer service representative told Amos the entire community of Cape Dorset, which has a population of roughly 1,500 people, suffers from a poor credit rating.

A follow-up email from a different Northwestel staffer explained that all credit checks go through a third-party consumer credit bureau: Equifax Canada.

“The credit result that we received from Equifax when your account was created does not reflect your personal credit score but [was] based on the entire community of Cape Dorset,” the Northwestel worker wrote.

Equifax, and another private credit bureau called Transunion Canada, are used by most businesses in Canada to do credit checks on consumers.

Northwestel then uses information provided by Equifax to determine which customers should be charged security deposits.

“[In] some communities such as Cape Dorset, the residents have a history of a low credit rating and this is why Equifax gave the location a Z [low] rating,” the Northwestel customer service rep said.

But as soon as Amos objected and provided her personal credit rating to the company, they returned her $150 security deposit.

She said she finds it disgraceful that a large company would charge security deposits to customers with good credit based simply on where they live.

“It is unconscionable to unfairly charge Nunavut residents security deposits for telephone lines when an individual’s credit score does not require them to do so,” Amos said.

She said the security deposit requirement hurts people who are already marginalized by food insecurity, unemployment, and a shortage of housing, health care and transportation.

And this Northwestel policy could create added financial stress for customers who do not realize the charge is based on a regional average and not their personal credit score, she said.

“It is also unfair for telephone communication providers to automatically give Nunavut residents a low credit score rating on the mere basis of their Nunavut geographical location, as this practice could be seen as biased and discriminatory,” Amos said.

In a statement emailed to Nunatsiaq News, the company denies that it uses “aggregate data” to charge security deposits.

“Northwestel never uses aggregate data to charge security deposits to customers with an available credit rating,” wrote Matt Wallace, the company’s manager of external communications, which seems to contradict what Northwestel told Amos.

Wallace said the company does not do credit checks itself, but relies on a credit bureau to do the work.

“Northwestel relies on one of Canada’s two trusted credit bureaus to provide credit ratings for potential customers. We are not privy to the specific customer credit history, nor the specific formulas and variables that the credit bureaus use to determine these credit scores,” Wallace said.

And Wallace said Northwestel does charge security deposits “on occasion.”

“We will always work with customers to provide alternative options, including referring them to the credit bureau to clarify a credit rating and in some cases approving a pre-authorized payment plan,” he said.

But Amos said Northwestel’s processes may be “dishonest,” and she wonders how many others are paying security deposits when they don’t have to.

“Basically, I did some more digging and it turns out that neither Transunion or Equifax has a credit check inquiry from Northwestel. Now I wonder if Northwestel is dishonestly telling people they will run a credit check, but none is actually run and then they unfairly charge people money for security deposits,” she said in an email.

Amos also said all Nunavut residents should check their credit reports periodically.

“I would also verify that when business providers request a credit check, that this credit check is also verified and substantiated by Equifax and Transunion.”

An earlier version of the subhead published with this story “Agency gives poor credit scores to all residents of Nunavut hamlet, ignores individual ratings” was intended to refer to Equifax Canada. For clarity, we have changed that headline to read “Credit bureau gives poor credit scores to all residents of Nunavut hamlet, ignores individual ratings.”