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Home / Business / Equifax pays about $ 700 million to resolve data breaches

Equifax pays about $ 700 million to resolve data breaches



Equifax


EFX -1.39%

is approaching an agreement to settle a series of government and federal investigations into a data outbreak in 2017 that exposed nearly 150 million Americans social security numbers and other sensitive personal information.

Under the deal, the credit reporting company would pay around $ 700 million to settle with the Federal Trade Commission, the Consumer Financial Protection Bureau and most state lawyers in general, according to people familiar with the case. The deal will also resolve a nationwide consumer class action lawsuit, they said.

The settlement could be announced as soon as Monday, the people said. The amount that Equifax ultimately pays can change based on the number of consumer claims that have finally been submitted, they added.

The deal would remove a cloud that hung over Equifax since it was revealed in September 201

7 that hackers had entered their systems and gained access to the consumer's name, social security number, date of birth and addresses.

The hack, among the largest consumer data breaches, exposed great security flaws to one of the country's largest credit reporting companies and increased security alerts among consumers and policy makers alike. Hackers were able to work their way into Equifax systems through a software failure that the company had neglected to patch. A scan malfunction tool, meanwhile, allowed hackers to move undetected in the company's network for months.

The backlash was fast. Within a few weeks, the company's long-term leader retired. State and federal officials launched a survey of investigations. Lawmakers ruled out Equifax leaders to wait six weeks to reveal the hack after suspicious activity discovered and raised questions about how it handles the consumption data it collects.

Equifax and the other two major credit reporting companies,

Experian

Plc and

TransUnion

compile long financial dossiers on hundreds of millions of Americans that include their credit accounts and repayment histories.

They also have access to addresses, social security numbers and other information needed to apply for credit. These personal details are what the hackers stole.

The break marked how little control consumers have over their personal data and how they are shared. Much of Equifax's revenue comes from credit reports and other products it sells to lenders, which use the information to assess potential borrowers. Unlike hacks that have affected consumers who shop at particular sellers or use specific websites, the Equifax breach has hit millions of people who never ran directly with the company.

The settlement would establish a fund to compensate consumers for damage caused by violations, according to people who are familiar with the case. A website and a call center will be set up to handle the claims, one of the people said.

The settlement would also require Equifax to make further changes to how it handles and protects consumer data, the people said. The company is about to spend some $ 1.25 billion to increase security systems and upgrade technology. Regulators in several states last year ordered the company to strengthen its information security defense, patches and disaster response protocols.

Equifax is still working to recover from hack nearly two years after it was revealed. New product sales to US-based lenders are falling and there are consumer product sales. The company suspended stock purchases and froze the dividend in 2017 to prepare for a potential settlement. In a May return, Equifax said it had set aside $ 690 million to cover investigation and litigation expenses. CEO Mark Begor told analysts that month that a global settlement was in the works that would cover "many of the major issues facing the company."

Violation of increased congressional review by the credit reporting industry. Congress passed legislation last year and excludes credit reporting companies from charging charges to freeze and release credit reports.

Some lawmakers have asked for tighter credit reporting companies to fix credit report errors.

At a House Financial Services Committee's hearing earlier this year, Equifax's CEO, Mr. Begor, said the company has taken steps since the breach to help consumers access and fix errors on their credit reports.

"Our culture is changing," said Mr. Begor, who testified with TransUnion and Experian leaders.

Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com

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