Friday, December 9, 2022

Equifax Takes a Pounding: Lawsuits, Senate Threats, Public Anger

Equifax Takes a Pounding: Lawsuits, Senate Threats, Public Anger

Credit monitoring and reporting firm Equifax continues to suffer backlash after revelations of a massive privacy breach last week. There are now over 30 lawsuits pending, and 36 U.S. senators have called for an investigation into questionable executive stock selloffs.

Also read: Don’t Be Fooled by Jamie Dimon’s Latest Bitcoin Slam

The scandal has highlighted inherent privacy and security flaws in the mainstream financial system. Additionally, it has revealed the public’s simmering resentment towards companies that monitor their activities and determine their futures — yet apparently care little for their wellbeing.

Over 30 Lawsuits and Counting

Almost everything Equifax has done surrounding the data breach has drawn criticism. At risk are the private financial records, including social security numbers and credit card details, of up to 143 million U.S. consumers.

Court decision justice lawsuitsLawyers are diving in to capitalize on the public outcry. Reuters reported that over 30 lawsuits have been filed against Equifax since the weekend. At least one accuses the company of securities fraud, saying it didn’t protect consumer data and inflating its financial statements even after discovering the hack.

Several people mocked Equifax’s offer of one free year of its TrustedID credit monitoring product to affected customers. The company was accused of using the crisis to onboard more users, to whom it could upsell more expensive services later. Some users claimed signing up for TrustedID required a promise not to participate in any lawsuits against Equifax. Others wondered why anyone would still trust the company with their data anyway.

Senators Question Executive Stock Selloffs

Then there’s the three executives who sold company stock worth a total $1.8 million USD in the days after staff discovered the hack. 1.8 million is not island-buying money, and Equifax maintains the three knew nothing of the hack. But the timing was fortunate for the sellers, and bad optics for a company already facing public outrage. The group of three also includes CFO John Gamble.

In any case, it was enough to prick up the ears of the U.S. Senate. 36 senators have called for authorities to investigate the trades. Senator Heidi Heitkamp (D-ND), who sits on the Senate Banking Committee, even said:

“If that happened, somebody needs to go to jail … It’s a problem when people can act with impunity with no consequences. How is that not insider trading?”

Underlying all this is why Equifax took until September to announce the breach publicly, despite discovering it on 29th July. If customers’ identities were at risk of theft, they should have been informed much sooner — if not immediately.

Equifax’s PR disaster is definitely not going to go away by itself. The company will have to take more dramatic steps to improve its image — if that’s still possible.

Do you think this backlash is deserved? Let’s hear your thoughts.

Images via Pixabay

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