Equifax Cash Settlement Backtracking Leaves a Bad Taste

Originally published at: https://tidbits.com/2019/08/05/equifax-cash-settlement-backtracking-leaves-a-bad-taste/

It turns out that so many people signed up to receive $125 cash instead of credit monitoring in the Equifax breach settlement that no one will receive much money. There’s nothing we can do about it, and it has many of us fuming.

Excellent article. I’m in the process of composing a comment for the FTC’s page, and I’m also going to write to my US Senator and US Representative. While they likely can’t do anything about this settlement, they need to be pushed to work on laws to safeguard, and compensate, all of us in the future.

This might be totally loopy, I am no doubt clueless when it comes to legal matters. But maybe somebody more versed in the law could comment if consumers could get anywhere suing the FTC. Could a case be made that the FTC negotiated in bad faith and put Equifax’s business interests before those of affected citizens thus neglecting their oversight mandate?

According to FAQ 24, you can exclude yourself from the settlement and presumably then sue Equifax directly.

And FAQ 25 explains how to tell the court that you don’t like the settlement. Looks complicated.

https://www.equifaxbreachsettlement.com/faq

I don’t know how these credit bureaus get paid but I’d like to think it is based on companies using them to check people’s credit report. If so, they lose. I’ve frozen my credit report with all three credit bureaus and have chosen to live with whatever credit I already have.

If I absolutely MUST go through a credit check (mortgage, car purchase), I can temporarily unfreeze my credit report. But I will avoid this as much as possible.

Maybe we all should do this—at least for a time. And screw the credit bureaus in the process. As if… I doubt Americans can break themselves of the credit habit. But it’s a nice thought. Imagine what would happen if, all in one fell swoop, 150 million consumers froze their credit reports over the course of a few weeks.

Objecting isn’t that complicated. First, steps 8-14 are if you’re represented by an attorney, which most people won’t be (and if you are, have the attorney do it :slight_smile: ). Steps 1-3 are trivial. For step 4 you should be able to follow FAQ 5. Step 5 is why you’re objecting, which presumably you know if you’ve decided to object. Step 6 is probably “None” (and an interesting question, weeding out serial objectors?). Step 7 is probably “No”, but if it’s “Yes”, it seems fairly straightforward what you have to tell them.

Note that I’m not an attorney, and I may be completely misinterpreting the FAQ, so if you’d like to object, make sure you read FAQ 25 carefully and understand what it’s asking for. Also remember that if you object you’re going on record in an actual court case.

Thank you for this article. Is there any reason to believe that credit monitoring provided as a result of this settlement is superior to that provided by Credit Karma?

I’m having some trouble with the numbers.
$700M total settlement
$175M to states
$100M to CFPB
$425M to consumers
so far, so good, but
$ 31M reimbursement payments
$ 31M lost time payments
$363M unaccounted for

“The FTC said the settlement included up to $425 million to help those affected by the breach.” If the remaining $363M is to help those affected by the breach, how? Is it to pay lawyers’ fees? If so, the lawyers are getting paid more than 10 times the amount identified for reimbursement payments.

(As an aside, apparently this forum’s software does not like white space. That table looked a lot prettier in the composition pane than in the preview pane.)

I have seen a suggestion for a class-action lawsuit against the lawyers who nominally worked for the affected citizens in this class-action lawsuit. If that $363M is for the lawyers, such a suit makes even more sense.

As I understand it, your assumption about the income of the credit bureaus is correct. While I applaud your sentiment, I question your apparent explanation. If you are living with whatever credit you have, how does freezing your credit reports hurt the credit reporting agencies? Freezing your credit reports is almost certainly a good thing, but it’s your decision to refrain from applying for new credit (also a good thing) that deprives them of business. In any case, it sounds like you have made two good decisions.

The credit monitoring is provided by Experian, for what that’s worth. And as I said in the article, you do get free identity theft insurance, which could have some value, although that Credit Karma article I linked to suggested that it’s generally not worth purchasing on your own. So, up to you.

The $31 million numbers come out of the $425. And the numbers don’t quite add up with what you see in some places because the $425 million is a maximum and the minimum is, I believe, $380,500. It has to do with how many claimants there are and when the claims come in. I thought about saying something, but it seems largely irrelevant to the topic at hand.

I’m not quite sure what you tried to do, but you can always make something preformatted text with the </> button in the composer’s toolbar (or just surround the text with backticks). That’s for a single line; for multiple lines, use the Markdown approach of prefixing each line with four spaces. In general, Discourse provides a LOT of formatting options compared to most online discussion forums.

I don’t think the lawyers’ fees are ever spelled out. The Findings say:

Defendant waives any claim that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear its own costs and attorneys’ fees.

The two are inter-related, at least in my experience. When one freezes one’s credit, one tends to think twice about the hassle involved in applying for credit thereafter. Not only do you need to fill out the credit application but you also have to unfreeze your credit report. In my case, that has reduced the number of gratuitous credit offers I have responded to down to zero, has made me decide that I probably don’t need an Apple Card, etc.

My point is that if 150 million people did the same, I would imagine there would be a lot fewer people applying for a lot fewer credit cards, if not fewer car loans and mortgage loans—because there would now be an aversive stimulus attached to applying for credit (namely the hassle of temporarily unfreezing your credit). Or maybe they’d just got the easy route and throw in the towel the first time they had to temporarily unfreeze their credit and simply unfreeze it in perpetuity.

I composed my response in BBEdit, including tabs. The tabs were apparently replaced by a space if in a line and deleted completely if at the start of a line.

It’s good to know the tools are there. Thanks for letting me know that looking for them might be profitable. (Now if I can just remember that the next time I need them…)

But those are Equifax’s attorneys’ fees. The lawyers who brought the class-action suit are surely getting some money, and I wonder if that is some or all of the missing $363M.

Excellent point. And a keen insight into human nature.

Yeah, don’t do that. :slight_smile: Tabs seldom work in Web-based forms—spaces are the way to go. Discourse’s composer even autosaves and remembers what you’ve typed if you accidentally close and reopen the page. So there’s no real win in writing outside of Discourse and pasting in.

This article (which I didn’t read in full because of the need to register) suggests that there are $77.5 million in attorneys’ fees.

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As an example of how pointless Equifax’s offer of free credit monitoring is, Chase is now offering it to me for free as well. Your bank or credit card company probably offers a similar service, in addition to Credit Karma.

AAA does, too. How many of these should I sign up for? (It’s a serious question.)

Quoted for emphasis.

I don’t know how these credit bureaus get paid but I’d like to think it is based on companies using them to check people’s credit report.

Selling historical data about the whether or not individuals pay their bills on time, how and what they borrowed, and how or how not they tend to pay them, is just one revenue stream. From all the records they accumulate, credit bureaus also analyze information on how people spend money, and they compile trend reports for big bucks. They also get paid from financial services that provide them as a free benefit to customers.

so, they lose. I’ve frozen my credit report with all three credit bureaus and have chosen to live with whatever credit I already have.

Freezing your credit means the credit bureau can’t let other people than the companies you have credit with see what’s just on that particular report. For example, if Goldman Sachs wants to target people that own silver, gold or black credit cards to send them information about the new Apple credit card, they can do so because they are not divulging specific financial information, social security information, just a name and address that’s in the public domain.

A really good examples of how financial bureaus’ information was used for nefarious purposes is Ryan Gosling’s explanation of tranches in “The Big Short,” which is an excellent, multi-award winning movie (warning - x-rated language):

Regarding security, check out how incredibly simple and easy it was for two brilliant but dorky bros to access critical financial info gleaned from credit bureau reports that they literally found in a lobby in an office building (just some bad language):

And Steve Carrell grilling Morgan Stanley’s rating agency on how and why they interpreted and presented data supplied by credit bureaus (lots and lots of x-rated words):

Margo Robbie on subprime mortages (more bad words):

I don’t see why you shouldn’t sign up for all of them!

Because the monitoring services themselves could experience a data breach?

Did you mean Steve Carell?

Yes, it is Steve, and IMHO, he should have gotten the Best Supporting Actor Oscar for the part. And Christian Bale for Best Actor.

I just heard from another service offering free credit reporting: WalletHub.

https://wallethub.com/

Like CreditKarma, it looks like their business model is to present users with a variety of credit cards and other financial services, but regardless of whether you want or need such things, the credit reporting is free.