Credit reporting bureau Equifax agreed to pay up to $700 million to settle prosecution actions over the data breach of 2017
Equifax, the credit bureau that suffered a massive data breach in 2017, agreed to pay at least $575 million and up to $700 million to settle with the Federal Trade Commission and the Consumer Financial Protection Bureau, and 50 U.S. states. The fine is set to also settle the customer class-action lawsuit against the organization – the breach affected almost 150 million Americans.
The agreement was announced by the Federal Trade Commission which stated that credit firm needs to pay $300 million to provide monitoring service for the people affected by the breach. Based on the total number of victims, the required amount may increase by at least another $125 million to cover all the losses.
Other expenses of Equifax include around $175 million paid to settle the lawsuits with District of Columbia and Puerto Rico. Also, civil penalties to the Consumer Financial Protection Bureau will cost up to $100 million. Since there is a possibility that more victims will file for claims, these numbers are not yet final.
Victims of the breach will be compensated in multiple ways
People affected by Equifax breach back in 2017 will be able to claim refunds and monitoring services once the court approves all the fines. Victims can get free credit for ten years and more helpful services regarding identity theft. According to the FTC's statement, victims of the Equifax breach can request the following:
- Free credit monitoring;
These include up to 10 years of free credit. People who were minors at the time of the breach will be eligible for 18 years of free credit monitoring.
- Identity theft protection services;
It guarantees free credit monitoring or identity theft insurance for four years.
- Cash payments;
Expenses for losses from unauthorized charges from accounts, costs of freezing and refreezing the credit cards, credit monitoring costs, and professional help from attorneys, notaries, or accountants can be refunded. Time spent dealing with the breach also gets compensated $25 per hour, up to 20 hours.
- Free identity theft recovery help;
At least seven years of free identity restoration services.
- Free credit reports.
Six additional free credit reports per year for at least seven years, starting in 2020.
The proposed settlement assumes that around 7 million people will sign up for these credit monitoring offers, and so on. Based on the total number of affected people, there is a possibility of a rise in all the amounts.
Equifax failed to deliver the very basic security measures to protect their customers, and now has to pay for it
Sensitive information, including Social Security and driver's license numbers, birth names, and other details were being stolen for two months before the company detected the breach. Upon discovery, Equifax did not rush to explain the situation to the media, or the victims, as the firm waited another month before doing so – it now has to pay up to $20 000 per victim. However, hundreds of millions got affected, and expenses may go up even more than the initial settlement states.
In addition to payments for victims and fines for the government agencies, Equifax agrees to overhaul security protocols and takes needed measures to prevent such incidents in the future. FTC Chairman Joe Simons came with the following statement regarding the incident and the responsibilities of Equifax:
Equifax failed to take basic steps that may have prevented the breach that affected approximately 147 million consumers. This settlement requires that the company take steps to improve its data security going forward, and will ensure that consumers harmed by this breach can receive help protecting themselves from identity theft and fraud.