RELEASE: Equifax Could Trick Data Breach Victims into Giving Up Right to Sue

FOR IMMEDIATE RELEASE

September 8, 2017

CONTACTS:

Jan Kruse, National Consumer Law Center, jkruse@nclc.org

Amanda Werner, Public Citizen, awerner@ourfinancialsecurity.org

Equifax Could Trick Data Breach Victims into Giving Up Right to Sue

Terms of Use of Equifax’s Website Include Forced Arbitration Clause and Class Action Ban

Adding insult to injury, consumers impacted by the massive Equifax data breach who accept free credit monitoring may unknowingly sign away their right to their day in court and their right to join with hundreds of millions of other impacted consumers, according to members of the Fair Arbitration Now coalition. The Consumer Financial Protection Bureau’s new arbitration rule will prevent credit reporting agencies like Equifax from banning class action lawsuits in connection with any information provided directly to a consumer from their file, which would include information used in connection with credit monitoring or identity theft protection services.  However, the rule is not yet in effect, and Congress is threatening to block the rule.

“It is outrageous that Equifax is trying to take advantage of its own massive breach of consumers’ trust to insert ripoff clauses taking away consumers’ legal rights,” said Amanda Werner, arbitration campaign manager with Americans for Financial Reform and Public Citizen. “Now is the exact wrong time for Congress to strip consumer protections. Repealing the CFPB rule would send a clear signal to bad actors like Equifax and Wells Fargo that they can continue to plunder consumers for profit.”

“Equifax just gave 143 million reasons why Americans should tell Congress not to take away their day in court when companies like Equifax abuse their trust,” said Lauren Saunders, associate director of the National Consumer Law Center.

On Thursday – nearly two months after the data breach was discovered – Equifax announced that it had been hit with a high-tech theft of personal information for 143 million consumers, including consumers’ names, Social Security numbers, birth dates, addresses and, in some cases, driver’s license numbers and credit card numbers.  In response, Equifax has set up a website, where people can check to see if their personal information may have been stolen and sign up for one year of free credit monitoring and identity theft protection.

But the “Terms of Use” on the website force users to resolve any disputes against Equifax by “binding individual arbitration,” to waive “the ability to bring or participate in a class action, class arbitration, or other representative action.”  Instead, people would be required to bring any claim in a secretive proceeding before a private arbitrator that Equifax agrees to, and even though 143 million consumers are impacted, people would have to hire lawyers individually and pursue their claims by “individual arbitration.”

A study by the Consumer Financial Protection Bureau found that most people do not bring individual claims and only an average of 16 people a year win in arbitration; most lose and pay $7,725. According to publicly available data, just five consumers have filed arbitrations against Equifax since 2009.

“From what we can tell, Equifax has faced only one consumer arbitration every other year or so,” said Werner. “Clearly, they are not interested in giving consumers an alternate forum to resolve disputes. They simply do not want to be held accountable for wrongdoing.”

The forced arbitration clause covers “any claim, dispute, or controversy between You and Us relating in any way to Your relationship with Equifax, including but not limited to any Claim arising from or relating to this Agreement, the Products or this Site, or any information You receive from Us … The term ‘Claim’ shall have the broadest possible construction …”  Equifax FAQs say that the TrustedID arbitration clause and class action waiver do not apply to the cybersecurity incident, but it is not clear if Equifax could rely on the broad clause in the website Terms of Use.

“Equifax should resolve any doubt by completely getting rid of its forced arbitration clause and class action ban, and Congress should uphold the CFPB’s arbitration rule so that justice is not up to the company’s choice,” said Saunders.

Fair Arbitration Now is a network of more than 70 consumer, labor, legal, and community organizations.

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