About two years ago, hackers breached the credit reporting agency Equifax and stole personal information from nearly 150 million people. Along with names and birthdates, the hackers also obtained social security and driver’s license numbers. As consumers responded in anger and disbelief that Equifax could be so negligent, government regulators immediately started investigating the agency. Last week the Federal Trade Commission (FTC) announced the results of that inquiry: Equifax agreed to pay a minimum settlement of $575 million that could increase to as much as $700 million.
As for consumers affected by the breach, the FTC said they could either receive a settlement of up to $125 or sign up for a free credit monitoring program. Of course, when presented with this choice millions of Americans decided to go with the former and take the cash. According to the Equifax settlement, however, only $31 million has been put aside to settle with individual consumers. As a result, the FTC urged people to choose the credit monitoring program since their settlement would likely be disappointing. “The public response to the settlement has been overwhelming,” wrote the FTC in a statement. “Because the total amount available for these alternative payments is $31 million, each person who takes the money option is going to get a very small amount. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.”
Rather than take the agency’s advice, however, the statement caused a social media uproar as angry users accused Equifax of dodging its responsibility to consumers. “This is unacceptable,” wrote one online commenter. “The court and Equifax knew there were 147 million claimants. Why offer $125 per claim and set aside only $31 million? Did someone forget to do the math?” Consumer advocates point out that while free credit monitoring is useful, many people are likely eligible for it through previous data breaches. What’s more, it’s likely that the cap on consumer settlements could be raised as the years go by, meaning that people affected by the Equifax breach could receive their $125 after a long wait.
Questions:
- Do you think the FTC reached a fair settlement with Equifax? Why or why not?
- Should people affected by the Equifax breach choose the cash settlement or the free credit monitoring program?
Source: Rachel Siegel, “‘Did Someone Forget to Do the Math?’ Consumers, Advocates Rail Against Lowered Equifax Cash Payouts,” The Washington Post, August 1, 2019; Lily Hay Newman, “You’ll Get Your Equifax Money. It Just Might Take a While,” Wired, July 31, 2019. Photo by Blogtrepreneur.