Senators slam business model Equifax using
Sale of credit monitoring service in wake of breach draws fire
WASHINGTON — Senators on Wednesday slammed Equifax Inc. for making money off its massive data breach and said Americans should have more control over the vast amount of sensitive personal information that credit reporting companies have about them.
“Equifax and this whole industry should be completely transformed,” Sen. Elizabeth Warren, D-Mass., told the company’s former chief executive, Richard Smith, at a hearing. “Consumers — not you — should decide who gets access to their own data.”
Warren and other members of the Senate Banking Committee questioned a business model that allows Equifax and the other credit reporting companies to collect consumers’ data and then charge them to monitor for misuse of that information by identity thieves.
“I don’t pay extra in a restaurant to prevent the waiter from spitting in my food,” said Sen. John Kennedy, R-La.
Smith, who stepped down last week in the wake of the breach, faced a second straight day of sharp bipartisan criticism on Capitol Hill for the hack that exposed the Social Security numbers and birthdates of as many as 145.5 million U.S. customers.
Senators also were outraged about the revelation that Equifax last week was awarded a $7.3 million, nobid contract by the Internal Revenue Service to verify taxpayer identities and prevent fraudulent access to the data.
“I won’t ask for a show of hands in the room, but I don’t know who would want to say we should buy
fraud protection from the people who were just hacked and dumped 145 million American records,” said Sen. Ben Sasse, R-Neb.
Sen. Mike Crapo, RIdaho, committee chairman, said that he believed there was bipartisan interest in legislation strengthening data security laws.
As he did at a House hearing Tuesday, Smith apologized for human and
technical errors that led to the data breach. But senators hammered him for Equifax’s failure to protect its data and then taking almost six weeks to notify the public of the breach.
“A gold mine for hackers should be a digital Ft. Knox when it comes to security. But security doesn’t generate short-term profits,” said Sen. Sherrod Brown, DOhio. “Protecting consumers apparently isn’t important to your business model, so you just gathered more and more information and peddled it to more and more buyers.”
Warren quoted a speech Smith gave in August in which he said fraud was a “huge opportunity” for Equifax because it could sell credit monitoring services.
“So the breach of your system has created more business opportunities for you,” she said.
“You’ve got three different ways Equifax is making money — millions of dollars — off its own screw-up,” Warren said.