The only newsletter that scans and analyzes the full breadth of regulatory developments every day. Written and curated by Rob Garver for SourceMedia.
9.8.17 - Thank God It’s Friday. Unless you happen to work in the Equifax public relations department.
When it comes to PR, about the best a credit reporting agency can hope for is that people don’t outright hate it. For members of the general public, interacting with them is like dealing with the cable company or going to the dentist. Everybody does it at some point, but never because they want to.
So it’s virtually never good news for a credit bureau when it’s name is in headlines, and that rule held true for Equifax on Friday morning, when the U.S. awoke to the news that the Atlanta-based company had admitted that a July data breach exposed vast amounts of personal information belonging to some 143 million consumers, including 209,000 credit card numbers.
The agency said that outside attackers were able to capture names, Social Security numbers, birth dates, addresses and driver’s-license numbers — a treasure trove of personal data for criminals seeking to commit identity theft or other kinds of financial fraud.
The Wall Street Journal put the scale of the breach in historical context this way: “The size of the hack is second only to the pair of attacks on Yahoo disclosed last year that affected the information of as many as 1.5 billion customers. It also involves nearly twice the number affected by one of the highest-profile breaches at a financial firm, the cyberattack at J.P. Morgan Chase & Co. about three years ago.”
That, all by itself, is a disaster for the company. But it isn’t even close to the end of the story.
The most glaring fact outstanding in reports about the breach is that the company has known about it since July 29. In a statement issued Thursday night it said, “Based on the company’s investigation, the unauthorized access occurred from mid-May through July 2017,” adding, “The company has found no evidence of unauthorized activity on Equifax’s core consumer or commercial credit reporting databases.”
On its Twitter account, the company wrote: “We recently discovered a cybersecurity incident involving consumer information. Once discovered, we acted immediately to stop the intrusion. We apologize to our consumers and business customers for the concern and frustration this causes.”
It offered no explanation for the 10-week delay in letting the victims of the breach know that their personal information was in the hands of hackers.
At a minimum, one would assume that given that much lead time, Equifax would have prepared an airtight response -- setting up a system to inform and assist consumers affected by the breach. But the company did not.
In brutal detail, Bloomberg’s Polly Mosendz on Friday morning detailed a system in which call center operators were unable to provide even basic information and a website setup to assist victims was laden with its own problems. In addition to requesting that consumers enter the same sort of personal data that was stolen in the first place, it used a CAPTCHA system that malfunctioned, making access impossible for some consumers.
At this point, readers might be saying to themselves, “Wow! Could this possibly get any worse?”
Yes. Yes, it could.
The company also had to disclose that three senior executives unloaded $1.8 million in company stock shortly after the discovery of the breach. The company said in a statement that CFO John Gamble, president of U.S. information solutions Joseph Loughran, and workforce solutions president Rodolfo Ploder “had no knowledge that an intrusion had occurred at the time.”
Still, it’s not a good look for a company already doing serious damage control.
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Today’s Key Reads
Internal control weaknesses correlate with financial fraud
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Congressmen concerned about misuse of .cpa domain
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A year later, Wells still struggling to repair tattered reputation
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Senate panel approves leadership picks for Fed, OCC
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Senate panel may again probe Wells scandals
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States modernize licensing system as more fintechs eye bank charter
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Euro, Bond Yields Rise on Report ECB Officials Agreed on Need for Stimulus Cut
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Plan to Fund Health Insurer Payments Coalesces
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New York regulator kicks Pakistan’s Habib Bank out of US
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Investors in catastrophe bonds flee Irma fury
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How Harvey Will Affect Houston’s Housing Market
Bloomberg - As counter-intuitive as it may seem, this may be a very good time to be selling a home in Houston -- as long as you built it on a hill. In the wake of Hurricane Harvey, undamaged housing is fetching top prices.
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