The company agrees to set aside a minimum of $380.5 million as breach compensation and spend another $1 billion on transforming its information security over the next five years. The 147 million US consumers affected by the breach have one week from today to file a claim.
The final minimum tab for Equifax’s failure to patch a known web application security flaw—that later proved to be the root cause of the company’s disastrous data breach in 2017—is over $1.38 billion.
The US District Court for the Northern District of Georgia Monday granted final approval of a settlement that arrived last July between the Federal Trade Commission and Equifax. Under the settlement, Equifax has agreed to set aside at least $380.5 million to settle claims related to its 2017 breach. The company has also agreed to spend at least $1 billion on information security and related technologies over a period of five years.
Personal data, including Social Security Numbers belonging to some 147 million US consumers was compromised in the breach. Equifax has blamed the incident on a buggy component in the open-source Apache Struts framework for which a patch was available at the time of the breach.
Money from the $380.5 million funds will be used to pay for credit monitoring services and compensation of up to $20,000 to individuals who can show documented out-of-pocket expenses directly related to the breach. The court-approved settlement allows individuals to claim up to 20 hours—at $25 per hour—for any time they might have had to spend taking preventative measures to protect their data against fraud and misuse following the breach. Up to 10 of those hours can be self-certified and requires no documentation.
Equifax will also provide up to four years of free three-bureau credit monitoring and identity protection services to victims of the data breach. In addition, the company will provide another six years of its own credit monitoring and identity protection service for free. Victims who were legal minors at the time of the breach are eligible for a total of 18 years of free credit monitoring.
Substantial as the costs are for Equifax, they could go even higher. The settlement, for instance, requires Equifax to set aside an additional $125 million in the event the $380.5 million funds prove insufficient to pay all claims. On top of that, the costs for the six years of additional credit monitoring that Equifax is required to provide under the settlement are not part of the $380.2 million funds. In approving the settlement, the court estimated that the market value of the free credit monitoring service—if all 147 million victims sign up for it—at an additional $2 billion for Equifax.
“This settlement is the largest and most comprehensive recovery in a data breach case in U.S. history by several orders of magnitude,” District Judge Thomas Thrash, Jr. wrote. “The minimum cost to Equifax of the settlement is $1.38 billion and could be more, depending on the cost of complying with the injunctive relief,” and other measures, he wrote.
Rui Lopes, sales engineering and technical support director at Panda Security says the security breach suffered by Equifax in 2017 was one of the biggest data in history. The big question is whether it could have been prevented. “And the answer is simply ‘yes,'” Lopes says. “Equifax left the door open to cybercriminals by not updating an open-source web application development framework.”
However, Jack Mannino, CEO at nVisium says what the incident really highlights, is the difficulty involved in running a security program at scale, especially for those under constant attack.
Though there were demonstrated gaps in security monitoring and secure development that contributed to the breach, the security issues at Equifax were not unique to them he says. “Most organizations commonly struggle with keeping software libraries and dependencies up to date,” Mannino says. “However, given the value of the data they protect, it demonstrates that there are real consequences to these events.”
Equifax’s Data Breach Settlement Website and settlement notice contain all details about the final settlement and the reliefs and benefits available under it. Consumers have until Jan. 22, 2020 to file a claim.