United States: Equifax Breach: Three Takeaways From The First Four Days

Last Updated: September 19 2017
Article by Brian H. Lam and Cynthia J. Larose

On September 7, 2017, Equifax, one of the three large credit reporting bureaus, announced a cybersecurity incident impacting approximately 143 million U.S. consumers. According to Equifax, the breach occurred mid-May through July 2017. Equifax learned of the cybersecurity event on July 29th, but waited until September 7th to address the public.

Beyond being one of the largest breaches in this nation's history, this breach is of particular note due to the sensitivity of the information that was breached. Social security numbers, addresses, birth dates, and in certain situations driver's license numbers may have been accessed. Additionally, around 209,000 credit card numbers and related dispute documents for around 182,000 U.S. consumers were accessed. Further, personal information for UK and Canadian residents may have been impacted as well.

Based on the events that have transpired thus far, three areas have emerged that companies will want to understand, internalize, and learn from.

1. Government Is Taking This Very Seriously

Government at multiple levels see this breach as both a continuation of a very concerning lack of corporate data security, and a strong impetus that more regulation and oversight is required. On September 8th, multiple House committees, including the Judiciary Committee, Financial Services Committee, and Energy and Commerce Committee, announced that they will hold hearings in the near future on the breach and whether to adopt a federal notice law. Further, House Majority Leader Kevin McCarthy (R-Calif.), Reps. Maxine Waters (D-Calif.) and Ted Lieu (D-Calif.), and Sens. Mark Warner (D-Va.) and Ron Wyden (D-Ore.), have all publicly provided their support for a national data breach notice standard and additional cybersecurity legislation.

Federal agencies are also quite active. The Consumer Financial Protection Bureau (CFPB) and the Federal Bureau of Investigation are already investigating. Samuel Gilford, spokesman for the CFPB has stated that CFPB is authorized to pursue enforcement actions against companies that engage in "unfair, deceptive or abusive practices" but that the CFPB "cannot comment further at this time." Many experts also expect the Federal Trade Commission to launch its own investigation.

At the state level, attorneys general for Connecticut, Illinois, Pennsylvania, and New York have already announced investigations, with many more likely to follow.

2. Appropriate Communications With Affected Consumers Are Essential

In the chaos of a data breach, every company possesses an important aspect of the remediation process that it can control – how it chooses to communicate with the public and those affected by the breach. While data breach notification laws do set a baseline in many cases, how a company handles its obligations, including how quickly it acts and provides information to affected consumers will set the tone for how the breach is viewed by the public, and potentially government as well.

Equifax has already made some decisions in this regard that have been less than helpful. First, it appears that Equifax waited over a six weeks to notify the public of the breach, learning of the event on July 29th, but waiting until September 7th to address the public. Second, at least initially, the tool provided on the website setup by Equifax for consumers to check if they have been impacted, appeared to provide "random results, even for fictional names and social security numbers." This has likely impacted consumer confidence in Equifax's handling of the breach remediation process. Third, three executives may have sold $2 million worth of company stock days after the breach, and more than a month before the breach was publically disclosed. Beyond the legal liabilities this could create, such activities may make the public feel that the privacy and security of their data was not the most important issue for company leadership after discovery of the breach. Fourth, as commented on by many, Equifax initially appeared to be using its offer of free products, including credit monitoring, as a mechanism to have affected consumers agree to an arbitration clause or class action waiver, although Equifax has since posted on its website that this was not its intention, and that no such waiver will apply to the cybersecurity incident.

3. Lack Of Incident Response Planning Will Create Negative Consequences

Companies that fail to plan for a cybersecurity incident plan to fail. Based on Equifax's response to this incident thus far, it is likely that additional incident response planning, before a breach occurred, would been quite beneficial. While every company's situation will be different, at a minimum every company should have a plan that allows for remediation of a data breach in a timely and effective manner. This means that pre-incident, companies need to: understand what sensitive data is being stored, partner with an appropriate cybersecurity forensics firm and trusted legal counsel, and create a roadmap for the notification of affected individuals and remediation of the breach. Companies that want the best chances of effective remediation will need to test the plan and prepare for the worst, refine the plan as a result of regular testing, and ensure key stakeholders understand their responsibilities for the remediation process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Brian H. Lam
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions