Equifax possibly profiting off data breach, Sen. Warren says

After introducing legislation targeting credit bureaus' bottom lines, the Massachusetts senator says, "Equifax is still making money off their own breach."


Sen. Elizabeth Warren has led the charge against Equifax for not doing enough to protect its customers before it was hit with a major data breach last year. Now she's saying the credit reporting agency might be making money off this breach.

"Equifax may actually make money off this breach because it sells all these credit-protection devices, and even consumers who say, 'Hey, I'm never doing business with Equifax again' -- well, good for you, but you go buy credit protection from someone else, they very well may be using Equifax to do the back office part," Warren said in an interview with Marketplace. "So Equifax is still making money off their own breach."

Equifax was hit with a massive data breach in September, when hackers stole data on more than 100 million consumers. Personal details like Social Security numbers and addresses were stolen, which has left those customers vulnerable to identity theft.

Since the breach, Warren, a Democrat from Massachusetts, and Sen. Mark Warner, a Democrat from Virginia, have authored a bill to make the laws tougher on credit reporting agencies. Introduced in January, it aims to make data breaches hurt companies' bottom lines. The legislation also address how credit reporting agencies collect consumer data and what they do to stop hackers.

"The financial incentives here are all out of whack," Warren said in a statement last month. "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."

If passed into law, the bill would give the US Federal Trade Commission the authority to inspect the companies that collect vast amounts of financial data on consumers, and to make sure they're protecting that information. It would also let the agency fine these companies in the event of a data breach -- $100 per affected consumer as a minimum. Half that money would be redistributed to the consumers caught up in the data breach.

In the case of the Equifax breach, that would have meant a fine of at least $14.3 billion. However, the fines would be capped at 50 percent of a company's gross revenue from the prior year.

Warren released a report earlier this month called "Bad Credit: Uncovering Equifax's failure to protect America's personal information." In the report, she details the hack and proposes ways to fight cyberthreats, including levying financial penalties against credit reporting agencies that don't fully safeguard their customers' data.  

Neither Warren nor Equifax immediately responded to a request for comment.

Equifax finds its big data breach hit an additional 2.4 million people

Equifax Inc. said Thursday that an additional 2.4 million Americans were affected by last year's data breach, although not as much personal information was stolen from them.

The credit reporting company said the attackers stole only the names and partial driver's license numbers of these additional people, unlike the previously disclosed 145.5 million Americans whose Social Security numbers were obtained. Attackers were unable to get the state where the licenses were issued, the date of issuance or expiration dates, Equifax said.

In total, roughly 147.9 million Americans have been affected by Equifax's data breach. It remains the largest known data breach of personal information in history.

The company says it was able to find the additional 2.4 million Americans by cross-referencing names with partial driver's license numbers using internal and external data sources. These Americans were not found in the original breach because Equifax had focused its investigation on those with Social Security numbers affected. People whose Social Security numbers have been stolen are generally more at risk for identity theft because of how much Social Security numbers are used in identity verification.

Equifax said it will reach out to the 2.4 million people and will provide the same credit monitoring and identity theft protection services it has been offering to the originally disclosed victims.

In October, Equifax was dragged to Capitol Hill to answer for its missteps, with former Chief Executive Richard Smith — who by then had resigned in light of the crisis — accepting responsibility for the data breach.

Last month, an investigation by Sen. Elizabeth Warren (D-Mass.) found that the company failed to keep its computer systems adequately up to date and was not forthcoming enough about its description of the damage.

"I spent five months investigating the Equifax breach and found the company failed to disclose the full extent of the hack," Warren said in a statement Thursday. "Enough is enough. We have to start holding the credit reporting industry accountable."

The Republican leader of the House Energy and Commerce Committee, Rep. Greg Walden of Oregon, said Thursday that despite "repeated" requests for documents from Equifax as a part of the committee's investigation, Equifax has provided only partial responses.

"We now are requesting a briefing with Mandiant, the third-party company responsible for investigating the breach," said Walden and Rep. Bob Latta (R-Ohio), who leads a subcommittee on digital commerce and consumer protection. "The American people deserve to know what went wrong, and our investigation will continue in full force until there are answers."

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