By Ryan Velez
In the wake of one of the largest data breaches in history, the hits keep coming for Equifax, though many would say that they are well-deserved. As we recently reported, three executives came under fire after it was revealed that they sold stock prior to the announcement of the breach (though the company says they did not know at the time). And now, Insurance Business Magazine reports that Equifax’s handling of the fallout is equally problematic, potentially duping customers into forgoing their right to sue.
On the surface, Equifax’s efforts seemed to be decent, if not extremely altruistic. Up to 143 million consumers had personal information up to social security numbers and credit card numbers revealed. The company followed up its announcement of the breach by setting up a website allowing people to check if their information had been affected by the data theft, as well as the chance to sign up for a free year of credit monitoring and identity theft prediction. However, the terms of service require customers to resolve any disputes against the company through binding arbitration and waive “the ability to bring or participate in a class action, class arbitration, or other representative action.” This could be a potentially dangerous piece of fine print.
To explain why, a recent study by the Consumer Financial Protection Bureau shows that only about 16 people per year win in arbitration against companies. Most lose and have to pay an average of more than $7,000 in legal expenses.
“It is outrageous that Equifax is trying to take advantage of its own massive breach of consumers’ trust to insert rip-off clauses taking away consumers’ legal rights,” said Amanda Werner, arbitration campaign manager for Americans for Financial Reform. As an addendum, only three consumers have filed arbitration lawsuits against Equifax since 2009, calling into question exactly how many people would have the opportunity to take the company to court over the breach if they fell for the bait, so to speak.
“From what we can tell, Equifax has faced just one consumer arbitration every three years or so,” Werner said. “Clearly, they are not interested in giving consumers an alternate forum to resolve disputes. They simply do not want to be held accountable for wrongdoing.”