Equifax agrees to pay $425 million in restitution and to provide New York consumers with credit monitoring services and free annual credit reports for five years.
Equifax Inc. is being held accountable for the 2017 data breach that exposed the sensitive financial and personal information of millions of Americans, including 8.5 million New Yorkers. A settlement was announced today between New York authorities and Equifax over the data breach. The settlement stems from separate investigations by the Department of Financial Services and the New York Attorney General’s Office into the credit rating agency and two of its subsidiaries, Equifax Information Services LLC and Equifax Consumer Services LLC.
Under the settlement, the companies will pay a fine of $10 million to DFS, $9.2 million to the New York Attorney General’s Office as part of $175 million to Multi-State Attorney Generals including New York, and Equifax has committed up to $425 million to the consumer restitution fund.
In addition to the fine, Equifax will provide New York consumers with credit monitoring services and free annual credit reports, and will pay restitution to consumers affected by the breach. New York consumers who were impacted by the data breach may enroll in at least four years of credit monitoring by the three major credit-monitoring services – Equifax, Experian and Transunion – and receive two free credit reports from Equifax every 12 months for five years.
Consumers will also be able to submit claims for reimbursement for certain losses resulting from the data breach to a court-appointed administrator. Equifax will pay an additional $50 million to the the Consumer Financial Protection Bureau (CFPB).
DFS investigated the companies’ security practices before and at the time of the breach, as well as their communications and the services provided to consumers immediately after announcement of the breach, and found that the companies engaged in practices that violated the Dodd-Frank Act and Financial Services Law § 408.
The DFS investigation found that the 2017 data breach at Equifax exposed New York consumers’ sensitive personal information, including their full names, Social Security numbers, dates of birth, addresses and for some consumers, credit card numbers, driver’s license numbers and dispute documents containing personal identifying information, and thus could have the potential to cause injury, including financial injury, to consumers and businesses.
DFS also found that following the announcement of the data breach on September 7, 2017, Equifax, Inc. and its two subsidiaries failed to provide adequate assistance to affected consumers, including inadvertently directing consumers to a website that was not owned by Equifax; failing to alert consumers that their data had not only been accessed attackers, but stolen; and providing a data breach website that was unable to provide certainty for consumers about whether they were impacted by the breach.
During the relevant period, Equifax conducted internal and external reviews of the information security program that identified areas for improvement and failed to implement on a timely basis some security measures that were mandated by their own policies. Further, the companies’ internal documents demonstrate that they were aware they were storing personal identifying information in development and testing environments, increasing the risk of identity theft, misuse of data and fraud. The companies also failed to encrypt certain consumers’ personal identifying information and failed to decrypt certain incoming and outgoing traffic in violation of their own policies.