Personal Finance: What can you expect from the Equifax settlement?

Personal Finance: What can you expect from the Equifax settlement?

Last week, credit bureau Equifax reached a compensation settlement for a massive data breach suffered in 2017. The accord with the Federal Trade Commission, the Consumer Financial Protection Bureau, and all 50 states has not yet been approved by the U.S. District Court but is expected to be finalized within a few months.

Over half of all Americans were potentially affected, so the odds are good that you will need to closely monitor your credit files and should take advantage of the compensation the settlement offers.

The 2017 breach involved personal information for 147 million consumers, including names, addresses, Social Security numbers, birthdates, and some driver’s license numbers. Equifax was cited for failure to patch a known vulnerability in its system and agreed to offer certain compensation and indemnification to affected consumers.

Equifax, one of the three major credit reporting agencies, agreed to set aside $380.5 million in a Consumer Restitution Fund, to provide for extended credit monitoring or a limited cash payment, and some reimbursement of expenses incurred in responding to possible ID theft episodes. Here’s how it works.

Affected customers can choose to receive four years of credit monitoring of all three agencies (Equifax, TransUnion, and Experian), plus an additional six years of monitoring Equifax only. This option also includes $1 million in ID theft insurance.

Alternatively, if you already have credit monitoring in place, you may choose to accept a cash payment of up to $125. The catch here is that you won’t know the amount coming to you until you see the check. That’s because the settlement requires the company to set aside just $31 million for the cash payments, and will reduce the amounts of individual payouts proportionately if the number of claimants exceeds 248,000. Given that number is less than 0.2% of potential claimants, there is a high probability of a reduced amount (if all 247 million chose the cash award, the amount of each check would be 21 cents). The best strategy here in most cases is to take the extended credit monitoring.

In the event that you have been a victim of ID theft deriving from data lost in the Equifax breach, you are eligible for certain reimbursements, including losses from unauthorized charges, credit monitoring and freezing expenses, legal fees and ancillary costs like postage, notary services and mileage incurred in the process of resolving the attack. You may also claim $25 per hour spent resolving the issue up to 20 hours. Total compensation is limited to $20,000, and documentation is required.

The agreement also includes six free Equifax credit reports over the next seven years, in addition to the one free credit report you are entitled to from each of the three agencies.

The deadline for acceptance of the compensation settlement offer is Jan. 22, 2020, after which time you will forfeit your benefits. You may also choose to reject the settlement and preserve your right to sue the agency separately if you wish, but you must make such declaration by Nov. 19.

You can register for the settlement on the Equifax data breach website, www.EquifaxBreachSettlement.com.First, click on the tab marked “Find out if your information was impacted.” If the answer is yes (flip a coin), then proceed to “file a claim” to complete the process online. You may also download and print a paper form to submit by mail if you prefer, or call 1-833-759-2982.

It is a given that our personal data will be hacked, and the Equifax breach was a doozy. It is imperative that we take proactive steps to safeguard our information.

Christopher A. Hopkins, CFA

Vice President and Portfolio Manager
Barnett & Company

Chris Hopkins

Chris Hopkins, CFA, is Vice President and Portfolio Manager for Barnett & Company. He is a native of Whittier, California and has lived in Chattanooga since 1988. He began his career in finance in 1998, following twenty years in manufacturing management. Chris joined Barnett & Company in 2004. He served for twelve years an adjunct professor of Finance at UTC, and writes a weekly column for the Chattanooga Times Free Press on finance and economics. He is currently president of the CFA Society of East Tennessee, and is a member of the North Carolina and South Carolina CFA Societies as well as the National Association for Business Economics. He presently serves as city council representative on the Chattanooga fire and police pension board, and is member of the finance committee for the AIM Center. Chris holds the Chartered Financial Analyst (CFA) professional designation. He received Bachelor’s degrees in Physics and Economics from California State University at Fullerton, and earned his MBA from the University of Tennessee at Chattanooga.
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