Equifax Inc.'s (EFX) - Get Report failure to protect the personal data of 143 million people from hackers has prompted two Democratic lawmakers to propose requiring the credit-reporting giant and its two biggest rivals to freeze credit files whenever consumers make a request -- for free.
Companies "like Equifax make billions of dollars collecting and selling personal data about consumers without their consent, and then make consumers pay if they want to stop the sharing of their own data," Sen. Elizabeth Warren of Massachusetts, who joined Sen.Brian Schatz of Hawaii in introducing the bill on Friday, Sept. 15, said in a statement. "Passing this bill is a first step toward reforming the broken credit-reporting industry."
The proposal is the latest response to a breach that Atlanta-based Equifax discovered in late July but didn't disclose to consumers until early September. While the company apologized and offered identity-protection to those affected, it initially required people using it to waive their right to sue and has yet to build a strong enough call center or website to handle the volume of queries it's receiving.
"You would think that, when it comes to cybersecurity, companies would put people over profit, but as we've seen with Equifax, that is not always the case," Schatz said in the statement. In addition to scrutiny from federal and state regulators, Equifax is facing a spate of lawsuits and the possibility that its own debt rating will be cut.
Standard & Poor's said late Monday that Equifax's BBB+ credit rating could be lowered if costs to address the Internet attack mount or if the company's revenue declines as a result of the incident. The score also might fall if further weaknesses are revealed in Equifax's internal controls.
The senators' bill, titled the Freedom From Equifax Exploitation, or FREE, ACT, further complicates a precarious situation for CEO Richard Smith, who has already described the hacking as the "most humbling moment" in the company's 118-year history.
The bill, which would apply to TransUnion and Experian as well, would prevent credit-reporting firms from profiting off of consumers' information during a freeze, strengthen fraud alert protections, and allow consumers an additional free credit report following the Equifax breach, the lawmakers said. It would also force Equifax and its rivals to refund any fees charged for credit freezes in the theft's aftermath.
Warren, who separately began an investigation into the hacking and Equifax's initial response, told the CEO in a letter that she was troubled by both.
"To address this issue and ensure that Americans' data are safe in the future, we must understand exactly what failures allowed hackers to gain access to nearly 150 million Americans' sensitive data," she wrote.
"Equifax has failed to provide the necessary information describing exactly how this happened, and exactly how your security systems failed," Warren added. "Furthermore, Equifax's initial efforts to provide customers information did nothing to clarify the situation and actually appeared to be efforts to hoodwink them into waiving important legal rights."
Equifax stock, which closed at $96.66 on Thursday, has dropped 32% since the breach was disclosed, while the S&P 500 has gained 1.3%
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