Warren, Warner Unveil Legislation to Hold Credit Reporting Agencies Like Equifax Accountable for Data Breaches
Bill Would Establish Cybersecurity Inspections, Impose Mandatory Penalties, and Compensate Consumers for Stolen Data; Under This Legislation, Equifax Would Have Paid At Least $1.5 Billion in Penalties for Latest Data Breach
Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Mark Warner (D-Va.) today introduced the Data Breach Prevention and Compensation Act to hold large credit reporting agencies (CRAs) - including Equifax - accountable for data breaches involving consumer data. The bill would give the Federal Trade Commission (FTC) more direct supervisory authority over data security at CRAs, impose mandatory penalties on CRAs to incentivize adequate protection of consumer data, and provide robust compensation to consumers for stolen data.
In September 2017, Equifax announced that hackers had stolen sensitive personal information - including Social Security Numbers, birth dates, credit card numbers, driver's license numbers, and passport numbers - of over 145 million Americans. The attack highlighted that CRAs hold vast amounts of data on millions of Americans but lack adequate safeguards against hackers. Since 2013, Equifax has disclosed at least four separate hacks in which sensitive personal data were compromised.
The Data Breach Prevention and Compensation Act would establish an Office of Cybersecurity at the FTC tasked with annual inspections and supervision of cybersecurity at CRAs. It would impose mandatory, strict liability penalties for breaches of consumer data beginning with a base penalty of $100 for each consumer who had one piece of personal identifying information (PII) compromised and another $50 for each additional PII compromised per consumer. Under this legislation, Equifax would have had to pay at least a $1.5 billion penalty for their failure to protect Americans' personal information. To ensure robust recovery for affected consumers, the bill would also require the FTC to use 50% of its penalty to compensate consumers and would increase penalties in cases of woefully inadequate cybersecurity or if a CRA fails to timely notify the FTC of a breach.
"The financial incentives here are all out of whack - Equifax allowed personal data on more than half the adults in the country to get stolen, and its legal liability is so limited that it may end up making money off the breach," said Senator Warren. "Our bill imposes massive and mandatory penalties for data breaches at companies like Equifax - and provides robust compensation for affected consumers - which will put money back into peoples' pockets and help stop these kinds of breaches from happening again."
"In today's information economy, data is an enormous asset. But if companies like Equifax can't properly safeguard the enormous amounts of highly sensitive data they are collecting and centralizing, then they shouldn't be collecting it in the first place," said Senator Warner. "This bill will ensure that companies like Equifax - which gather vast amounts of information on American consumers, often without their knowledge - are taking appropriate steps to secure data that's central to Americans' identity management and access to credit."
The Data Breach Prevention and Compensation Act is supported by cybersecurity experts and consumer groups:
"U.S. PIRG commends Senators Warren and Warner for the Data Breach Prevention and Compensation Act. It will ensure that credit bureaus protect your information as if you actually mattered to them and it will both punish them and compensate you when they fail to do so," said U.S. PIRG Consumer Program Director, Ed Mierzwinski.
"This bill establishes much-needed protections for data security for the credit bureaus. It also imposes real and meaningful penalties when credit bureaus, entrusted with our most sensitive financial information, break that trust," said National Consumer Law Center staff attorney, Chi Chi Wu.
"Senator Warner and Senator Warren have proposed a concrete response to a serious problem facing American consumers," said Electronic Privacy Information Center President, Marc Rotenberg.
"This bill creates greater incentive for these companies to handle our data with care and gives the Federal Trade Commission the tools that it needs to hold them accountable," said Director of Consumer Protection and Privacy at Consumer Federation of America, Susan Grant.
Read more statements of support here. View a fact sheet about the legislation here. View the bill text here.
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