Congress and Trump shake hands with Equifax after data breach (illustrated)

What’s worse than a do-nothing Congress? One that rewards bad behavior.

And that’s where we are at. The Senate’s recent banking deregulation effort included goodies for a company that certainly doesn’t deserve them.

The credit bureau Equifax last year suffered arguably the worst (if not the biggest) consumer data breach ever — and it was mostly the company’s fault for having lax security. It didn’t even spot the breach for over two months, and didn’t tell the public for another six weeks.

That should be considered criminally negligent, and a couple Democratic Senators unsuccessfully tried to make that happen. Instead, the company is about to be rewarded.

What credit bureaus get out of the deregulation bill

In one sense, Equifax is just benefiting from the fact the other credit bureaus haven’t royally screwed up. They all work in concert, though, and it should probably the other way around — that one bad apple spoils the bunch. Instead, the deregulation bill instead hands credit bureaus two big victories.

“Lobbyists for the companies quietly prevailed in a months-long fight to secure language that would shield the firms from consumer lawsuits stemming from the free credit monitoring requirement,” Politico reports. “Another add-on — which could have a considerable impact on the housing market — could give a joint venture operated by the three companies an entry into providing credit scores for aspiring homeowners applying for mortgages.”

So credit bureaus get to avoid expensive class action lawsuits when they inevitably screw up again. And then they get to wiggle into the mortgage market, too.

The major credit scoring company is FICO, and all kinds of financial companies use its scoring model to judge whether to loan people money or give them credit cards and on what terms. While FICO owns the model, though, it crunches the numbers based on credit bureau data — our credit reports.

The credit bureaus don’t like that and figured they could make their own credit scoring model, called VantageScore. Unfortunately, nobody much cared to switch to theirs when nothing was wrong with FICO — so they’ve lobbied Congress to force their way in. The deregulation bill “would force government-controlled mortgage giants Fannie Mae and Freddie Mac to consider allowing the use of consumer credit score models beyond those provided by FICO, which for years has dominated the space.”

Why Equifax doesn’t deserve protection or a new market

It should be obvious, but since Congress is keen on doing it anyway, let’s spell things out.

Because of Equifax’s lousy security, one in three Americans had personal data stolen, including names, Social Security numbers, birth dates, addresses, and even some driver’s license numbers. This info can be used for identity theft and cause real financial damage.

On top of that, many Americans spent money in the hopes of protecting themselves after the breach — $1.4 billion, in total, for something that should be free. Consumers don’t “opt into” giving up this data and shouldn’t have to pay to guard it. (This part Congress agrees with — the deregulation bill will also force the bureaus to offer credit freezes to consumers for free, and military servicemembers also get free credit monitoring.)

We’re still not even sure of the extent of the Equifax breach. Just earlier this month, Equifax realized 2.4 million more Americans were affected than it realized.

It also came to light last week that a former Equifax executive may have committed insider trading by dumping $1 million in stock during that very convenient period Equifax knew about the breach and didn’t bother telling anyone. According to the legal complaint for those charges, Equifax had a top-secret operation called Project Sparta to quietly address the expected fallout, including setting up a much-criticized website for consumers to check whether they were affected.

Are we really willing to trust credit bureaus even more after this? Congress thinks so. The only thing preventing Equifax from getting these new perks right now is the fact the House Financial Services Committee chairman, Republican Jeb Hensarling, doesn’t think the deregulation bill goes far enough in destroying consumer protections.

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Article last modified on July 12, 2018. Published by, LLC . Mobile users may also access the AMP Version: How Congress Plans to Reward Equifax for the Worst Data Breach Ever - AMP.

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Article last modified on July 12, 2018. Published by, LLC .