Internet Lawyer Blog

As the Equifax breach continues to become a complicated issue, certain lessons can be learned for other businesses handling personal information. Namely, what not to do in their business operations?  In the wake of the cybersecurity breach, it had been reported that Equifax was aware of the security gaps, and did nothing to remedy them. So, where exactly did Equifax go wrong in its data security plans? How was it informed about the open holes in its security infrastructure?  What can a business owner do to avoid becoming an encore of Equifax’s folly? Is there any way to determine gaps in security policies and procedures?

Where did Equifax go wrong?

Effectively, Equifax appears to have failed at multiple levels, resulting in this breach. This is best summarized into one large mistake. There were no updates implemented to the computer systems Equifax used on its networks.  This was due to a delayed response to a known vulnerability in the Apache Struts web application. This framework is well known, it is used in the business community, and is an open-source framework for developing Java applications. In short, the delay was exasperated by the company’s failure to detect the vulnerability during a security scan.

As the Equifax breach has developed recently, another issue has come up, namely the arbitration provision within its website, which has caused consumer outrage and confusion. So, why does this provision matter? If consumers want to get their credit frozen, or check to see if they were affected, surely Equifax wouldn’t add insult to injury to the consumers who are suffering from its mistakes. Certainly, it would appear to be bad business to do so, or at least, unwanted attention. However, Equifax cannot be said to avoid adding insult to injury. Instead, Equifax has implemented that arbitration provision, and later removed it. So again, why would Equifax implement this provision? What impact might it have on the consumer? Why might this be important for businesses everywhere to observe?

What is the arbitration provision?

The arbitration provision that had insulted many consumers was attached to Equifax’s offer of free credit monitoring. In exchange for the service being performed (after the security breach) Equifax demanded that consumers settle any dispute with them through arbitration. In general, arbitration is a private and less costly way to settle disputes outside of the courtroom. While the results of the arbitration may be binding, it gives broader latitude to discovery, time, and may be faster and less formal than a formal trial.  While Equifax later clarified this provision would not apply to the current breach, however, nevertheless consumers were upset at the revelation.

Let us move on to the ways to protect ourselves in the future by using a credit freeze or fraud alert.  These options can protect your personal, private, and confidential information after a security breach and effectively add extra protection against identity theft. We have discussed them briefly in the past, although now, it seems appropriate to dive into further analysis. What are credit freezes and fraud alerts? How do they add more protection against identity thieves? What other actions might someone take to create additional safeguards?

Credit Freeze

The first and most basic way to prevent harm from identity theft is through a credit freeze, also known as a security freeze. A credit freeze is more or less what it sounds like–i.e., it “freezes” your credit where no lender can get access to your credit unless the consumer decides to lift it. Even then, the freeze cannot be undone without a pin number issued at the time of the freeze.

Equifax presents an interesting question to consumers. Somehow, an entity that no consumer may have had an actual interaction with has their information, and had leaked it out onto the world. For example, names, phone numbers, credit card numbers, social security numbers, addresses, e-mails were collected and released to unauthorized individuals. They may not have given consent, at least none they could remember. Yet, the information was with Equifax. How did the breach occur? What exactly is Equifax? How did it obtain your personal information? And perhaps most importantly, what comes next?

What is Equifax?

Equifax is a credit reporting agency. The purpose of entities like Equifax (as well as Experian and TransUnion) is to collect and share credit information on consumers. The credit reporting agency tells businesses which consumers are worthy of credit. Effectively, it is a way to outsource due diligence that may otherwise be more costly or time consuming for the business to perform on its own.

Now that we’ve discussed Catfishing as a scam, let’s go into further detail regarding the motives.  Like any scam, there must be some benefit to the scammer. This benefit is the primary motive for anyone to commit a catfishing scam.  Previously, we mentioned that among other things, the perpetrator may ask for photographs, or for some information to “verify” a person’s age, or to enable their transportation to be “closer” to their target. So, what are the major risks to these actions? What exactly does a catfishing perpetrator want to get from a victim? How might the information provided be used against you?

For Financial Information

The more dangerous elements of catfishing tend to prompt for, as we discussed before, a financial component. This would include asking for money–to get transportation to the person’s location, clothing, or whatever reason the scammer may present–or for credit card information. In the case of the latter, this is usually done in conjunction with asking the individual to sign up through a different, new dating site compared to what the potential victim may be using, and generally to “verify” the age or identity of the person involved.