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Equifax Bill May Gain Surprising Bipartisan Support
Monday, September 18, 2017 6:40 AM

An article in Friday's Credit Union Journal discusses a legislative bid in Congress to reform the credit reporting industry following the massive data breach at Equifax, which exposed the personal information of 143 million consumers.

Introduced by Sens. Elizabeth Warren (D-Mass.) and Brian Schatz (D-Hawaii), the bill is seen by analysts as tempered and balanced, which could help it pick up support. Among other things, the bill would create a federal requirement for credit bureaus to offer free credit freezes to consumers impacted by a data breach and prevent bureaus from selling consumer information while a freeze is in place.

Since Republicans have also expressed outrage over the Equifax data breach, the bill might even pass sooner if it was attached to a spending bill that Congress will have to address in December. However, others who favor reforming the industry said it may not be that easy.

“The economic incentives of credit bureaus to treat consumers fairly have always been warped,” said Aaron Klein, policy director of the center on regulation and markets at the Brookings Institute. “Reform of credit bureaus and credit reporting could increase economic growth, but would require serious political will.”

Howard Tischler, co-founder at EverSafe, a technology company that protects seniors from fraud and identity theft, said while policymakers will likely focus on Equifax’s response to the data breach, more could be done to preemptively mitigate harm.

“There is probably more that can be done in terms of protecting the data up-front," he said. "But I am going to guess that the regulatory body will probably have a harder time pushing more things to do to protect the data up-front because these databases are massive. To implement different technology up-front would take considerable time."

Tischler added that the industry could benefit from some creative thinking, such as having a credit freeze for new born babies when they first receive a Social Security number and lifting it at an appropriate time later. He also said other measures could be taken to protect consumers.

“Why does the Social Security number have to be stored in so many places? It is a very sensitive piece of information," said Tischler, who added that blockchain technology or tokenization could be useful.

Warren’s bill would give consumers more control over their data, but implementing a credit freeze and lifting it isn’t as easy as flipping a switch. The primary difficulty is that all three credit bureaus have to communicate with each other.

“Even if you put a credit freeze on at the three bureaus, your data is going to be sold out there for marketing purposes," said Tischler. "It is just not going to be by the credit bureaus, so it solves part of the problem, but it doesn’t solve the entire problem."

The credit reporting industry also contends that Warren’s bill is tackling the wrong problem. Equifax was a cybersecurity event and not a breakdown of the Fair Credit Reporting Act.

Francis Creighton, president and chief executive officer of the Consumer Data Industry Association, noted the industry believes that implementing new regulations on the credit reporting industry would impede the ease of access to credit that consumers enjoy and often need if they are in a financial bind. Preventing credit bureaus from selling consumer data while there is a credit freeze would also make it hard for a financial company to market products that might be beneficial to a consumer, like a credit card with a lower interest rate.

But consumer advocates like the Center for Responsible Lending disagree, voicing support for Warren's bill. It gives consumers more control over their financial data and gives them the tools to protect themselves, said Melissa Stegman, a senior policy counsel at CRL.

“We think it is strong response to Equifax data breach,” said Stegman who added that with roughly half the U.S. population impacted by the breach, “This transcends the differences between people and their politics.”


Stop the Data BreachesConsumers must have the ability to know if they have been compromised and have the tools to protect themselves. We will continue to press members of our congressional delegation for a legislative solution, and credit union advocates are also encouraged to contact their representatives in support of breach legislation.

You can help at Stop the Data Breaches.