The FTC announced Equifax’s settlement this morning:
As part of the proposed settlement, Equifax will pay $300 million to a fund that will provide affected consumers with credit monitoring services. The fund will also compensate consumers who bought credit or identity monitoring services from Equifax and paid other out-of-pocket expenses as a result of the 2017 data breach. Equifax will add up to $125 million to the fund if the initial payment is not enough to compensate consumers for their losses. In addition, beginning in January 2020, Equifax will provide all U.S. consumers with six free credit reports each year for seven years—in addition to the one free annual credit report that Equifax and the two other nationwide credit reporting agencies currently provide.
The company also has agreed to pay $175 million to 48 states, the District of Columbia and Puerto Rico, as well as $100 million to the CFPB in civil penalties.
It seems to me that no fine and no penalty — no matter how great — can ever fully compensate the 147 million Americans who are now subject to a heightened risk of identity theft and fraud. This is certainly a lot of money, but Equifax’s stock price rose today when this news was announced, and it has nearly fully recovered to its pre-breach high. Equifax also continues to be one of only three companies that provides credit reports in the United States in a highly mature and noncompetitive market.
The lesson that has surely been learned here is that a company can have lax security, fail to notify customers for months about a breach, issue new revelations in drips, and be borderline useless through the entire process as long as that company participates in a market with few competitors, retains shocking amounts of personal data, and faces few consequences to its financial position as a result.
By the way, the CFPB fine is far more than I expected. That Bureau used to be run by Mick Mulvaney who, before he became the President’s Chief of Staff, tried to curtail the Equifax investigation and generally rob the Bureau of its duty.