September 19, 2019
Reports indicate questionable tactics used by FTC to reduce the number of consumers who will receive payments for having their data exposed in the Equifax breach
Senator Warren Raises New Concerns About Equifax Turning Away Customers Impacted by Data Breach and Seeking Settlement Awards
Reports indicate questionable tactics used by FTC to reduce the number of consumers who will receive payments for having their data exposed in the Equifax breach
Washington, DC - United States
Senator Elizabeth Warren (D-Mass.), member of the Senate Banking, Housing, and
Urban Affairs Committee, sent a letter to the Federal Trade Commission (FTC)
requesting information regarding reports that consumers
who opted to receive a $125 payment as a part of the Equifax breach settlement
are now receiving suspicious-looking emails forcing them to complete additional,
complicated steps in order to receive payments – an action that appears designed
to reduce the final number of consumers who receive the cash award. Consumers
may also be unlikely to complete the additional steps from suspicious-looking
emails after having their personal information exposed. Last month, the senator requested
the FTC Inspector General launch an investigation into FTC’s handling of the
settlement payout process after questions were raised about the FTC’s role in
misleading the American public about the terms of the settlement and consumers’
ability to obtain the full reimbursement. Given the new reports, Senator Warren
is following up on her August 2019 request by directly questioning the FTC
about its role in what appears to be a new effort to reduce the final number of
consumers who receive cash awards from the settlement. Almost
two years after the Equifax breach, on July 22, 2019, Equifax reached a
settlement with the FTC, the Consumer Financial Protection Bureau (CFPB), and
50 U.S. states and territories, agreeing to pay between $575 and $700 million. The
settlement offered affected consumers the option to choose four years of credit
monitoring or a cash award of up to $125. However, the settlement only allotted
$31 million to this cash award fund and stipulated that payments “shall be
reduced on a pro rata basis” –
information that was not provided in an appropriate fashion to consumers until
after they selected their settlement option. On
September 7, 2019, consumers who requested the $125 payment before August 2,
2019 received an email from the Settlement Administrator informing them of
additional steps they would need to complete before they could receive any cash
payments. The email informed them that unless they “provide the name of [the]
credit monitoring service” they had before filing their claim or “amend [their]
claim to request free credit monitoring” instead of the cash award, their claim
for $125 “will be denied.” “On
top of the growing list of flaws in the Equifax settlement, these additional
steps that appear to be designed to weed out deserving claimants were not even
initially communicated to the 147 million consumers affected by the breach,” said
Senator Warren in a statement released alongside her letter to the FTC. “I
am asking the FTC why the Equifax settlement was so flawed, why communications
about the settlement were so misleading, and why the FTC hasn’t stepped in to
restrict the use of these latest tactics.” The
senator requested that the FTC address her questions no later than October 2,
2019. In
the aftermath of the massive Equifax breach in 2017, Senator Warren opened an
investigation into the causes of the breach and the company's response, and
since then, has taken numerous actions to address data security problems,
improve federal oversight of financial institutions, and better protect
consumers:
- Senator
Warren recently requested an
investigation
of FTC’s misleading Equifax settlement descriptions which did not advise
consumers affected by the Equifax breach of the likely reduction of their
settlement payments.
- In August
2019, she pressed Capital
One regarding the massive data breach revealed earlier this month that
compromised sensitive personal information of over 100 million Capital One
customers.
- In June 2019,
Senators Warren and Ron Wyden (D-Ore.), and Chairman of the House
Committee on Oversight and Reform Elijah Cummings (D-Md.) released a
Government Accountability Office (GAO) report identifying significant gaps
in the federal government's treatment of citizens' personally identifiable
information.
- In May 2019,
Senator Warren and Chairman Cummings reintroduced the bicameral Data Breach
Prevention and Compensation Act with Senator Mark Warner
(D-Va.) and Representative Raja Krishnamoorthi (D-Ill.) to hold large
credit reporting agencies accountable for data breaches involving consumer
data.
- In April
2019, Senator Warren introduced the Corporate
Executive Accountability Act, legislation that would make
executives of big corporations criminally liable if their companies commit
crimes, harm large numbers of people through civil violations, or commit
new violations while under the supervision of the court or a regulator for
a previous violation. The bill would make it easier to send executives to
jail who are found liable or enter a settlement with any state or Federal
regulator for the violation of any civil law if that violation affects the
health, safety, finances, or personal data of 1% of the American
population or 1% of the population of any state.
- Senator
Warren and Chairman Cummings released two additional GAO reports, prepared
at their request, detailing how hackers exploited
significant vulnerabilities at Equifax to gain access to
the sensitive personal information of more than 145 million Americans and
recommending stronger
consumer protection efforts to prevent another Equifax
disaster. GAO recommendations were incorporated into the lawmakers' 2019 bill.
- Senator
Warren released the
first comprehensive review of consumer complaints in the wake of the
breach, revealing that the CFPB received more than 20,000 consumer
complaints following the Equifax breach.
- In March
2018, on the 10th anniversary of the collapse of Bear Stearns, which
marked the beginning of the financial crisis, she introduced the Ending Too
Big to Jail Act,
a bill that would make it easier to bring criminal charges against bank
executives whose organizations defraud consumers.
- Senator
Warren unveiled a
15-page report in
February 2018 containing the findings of a four-month long investigation
into how Equifax failed to protect the personal data of more than 145
million Americans.
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