October 04, 2017

Senator Warren Asks Former Equifax CEO if Breach Created New Business Opportunities for the Company

Warren: "Equifax did a terrible job of protecting our data because they didn't have a reason to care."

Video available here (YouTube)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) questioned former Equifax CEO Richard Smith during today's Senate Banking Committee hearing about how the company might profit from selling more fraud prevention services in the wake of its recent security breach.

Senator Warren noted that while Equifax has committed to offering one year of free credit monitoring to those affected by the hack, consumers will have to pay for the service for years to come in order to protect personal data compromised by Equifax's negligence. The Senator pointed out that so far, 7.5 million people have signed up for the service, and if even one million pay for an additional year of monitoring, Equifax will make over $200 million as a result.

"From 2013 until today, Equifax has disclosed at least four separate hacks in which it compromised sensitive personal data.  In those four years, has Equifax's profit gone up?" asked Senator Warren. "Yes," responded Mr. Smith.

"Equifax did a terrible job of protecting our data because they didn't have a reason to care to protect our data," said Senator Warren. "The incentives in this industry are completely out of whack.  Because of this breach, consumers will spend the rest of their lives worrying about identity theft.  Small banks and credit unions will have to pay to issue new credit cards.  Businesses will lose money to thieves.  But Equifax will be just fine - heck, it could actually come out ahead."

Senator Warren also pointed out that in addition to profiting from its own credit monitoring products, Equifax has already made money off of consumers who have purchased credit monitoring through LifeLock.  Equifax can also profit by selling more fraud prevention products to businesses and government agencies that have more reason to fear fraud in the wake of the Equifax breach.

"Equifax and this whole industry should be completely transformed. Consumers - not you, consumers - should decide who gets access to their own data," said Senator Warren.  "And when companies like Equifax mess up, senior executives like you should be held personally accountable and the company should pay mandatory and severe financial penalties for every consumer record that's stolen."

Senator Warren began an investigation following the breach and Equifax's delayed and lackluster response, sending letters to Equifax, TransUnion, Experian, and a number of government agencies, to request a thorough investigation into consumer data security of credit reporting agencies. She expanded her investigation a week later into the causes of the breach and the company's response, writing to Equifax's Board of Directors, as well as the Securities and Exchange Commission and the Department of Homeland Security.

Senator Warren has also introduced the Freedom from Equifax Exploitation (FREE) Act to give control over credit and personal information back to consumers. The legislation would allow consumers to freeze and unfreeze access to their credit file for free.  It would also prevent credit reporting agencies from profiting off of consumers' information during a freeze, enhance fraud alert protections, and provide the opportunity for consumers to receive an additional free credit report following the Equifax data breach.  Finally, the bill would force Equifax and the other credit reporting agencies to refund any fees they charged for credit freezes in the wake of the Equifax data breach.

The full video of the exchange between Senator Warren and Mr. Smith is available here