Senator Warren questions former Equifax CEO Richard Smith after massive data hack

Thank You mr. chairman now mr. Smith Equifax has been hacked several times in the past few years it is consistently rated as having some of the worst data security practices in the financial services industry and this latest hack happened through a hole in your system that had had been identified months before and could have been fixed pretty easily the whole thing is staggering a company like Equifax that has sensitive personal information on most Americans should have the best data security in the industry and instead it has the worst and I want to understand why so I started to look into this and one thing jumped out at me in August just a couple of weeks before you disclosed this massive hack you said and I want to quote you here fraud is a huge opportunity for us it is a massive growing business for us now mr. Smith now that information for about a hundred and forty five million Americans has been stolen is fraud more likely now than before that hack yes in order is yeah so the breach of your system has actually created more business opportunities for you for example millions of people have signed up for the credit monitoring service that you announced after the breach Equifax is offering one year of free credit monitoring but consumers who want to continue that protection after the first year will have to pay for it one thing mr. Smith no senator the best thing a consumer could do you just get their lifetime nightlock I'm asking you the question you're offering free credit monitoring what you say is worth something and you're offering it for only one year if consumers want it for more than one year they have to pay for it is that right yes senator if the most the best thing is a consumer can do is the lock product okay but they're going to have to pay after one year if they want your credit monitoring and that could be a lot of money so far seven and a half million people have signed up for free credit monitoring through Equifax since the breach if just 1 million of them buy just one more year of monitoring through Equifax at the standard rate of 17 dollars a month that's more than 200 million dollars in revenue for Equifax because of this breach but there's more LifeLock another company that sells credit monitoring has now seen a tenfold increase in enrollment since Equifax announced the breach according to filings with the SEC LifeLock purchases credit monitoring services from Equifax and that means someone buys credit monitoring through life log LifeLock turns around and passes some of that revenue directly along to Equifax is that right mr. Smith that is correct that's correct okay um so from the second Equifax announced this massive data breach Equifax has been making money off consumers who purchased their credit monitoring through life law now Equifax also sells products to businesses and government agencies to help them stop fraud by potential identity thieves is that right mr. Smith yes senator there's one one clarification you'd mention the LifeLock relationship was accurate at the same time the majority that revenue would normally generate is direct-to-consumer we've shut that down we're no longer selling consumer product directly I'm sorry my question is every time somebody buys through LifeLock and they've seen a tenfold increase since the breach you make a little more money we actually called the LifeLock people to find this out so I asked you the question but I already know the answer it's true you're making money off this so let me go to the third one Equifax sells products to businesses and government agencies to help them stop fraud by potential identity thieves right to the government yes not to the business you don't sell to businesses too we sell business but it's not to prevent fraud that's not the primary focus or the business but just to stop identity theft you don't have any products that you're touting for identity theft for all I'm saying is the vast majority we do for businesses is not fraud sir look you've got three different ways that Equifax is making money millions of dollars off its own screw up and meanwhile the potential cost Equifax are shockingly low consumers can sue but it turns out that the average recovery for data breaches is less than $2 per consumer and Equifax has insurance that could cover some big chunk of any potential payment to consumers so I want to look at the big picture here from 2013 until today Equifax has disclosed at least four separate hacks in which it compromised sensitive personal data in those four years has Equifax is profit gone up mr. Smith yes sir yes it has gone up right in fact it's gone up by more than 80 percent over that time you know here's how I see this mr. chairman Equifax did a terrible job of protecting our data because they didn't have a reason to care to protect our data the incentives in this industry are completely out of whack because of this breach consumers will spend the rest of their lives worrying about identity theft small banks and credit unions will have to pay to issue new credit cards businesses will lose money to thieves but Equifax will be just fine heck it should actually come out ahead consumers are trapped there's no competition nowhere else for them to go if we think Equifax does a lousy job protecting our data we can't take our data to someone else Equifax and this whole industry should be completely transformed consumers not you consumers should decide who gets access to their own data and when companies like Equifax mess up senior executives like you should be held personally accountable and the company should pay mandatory and severe financial penalties for every consumer record that's stolen mr. chairman we've got to change this industry before more people are injured thank you

Channel: Senator Elizabeth Warren

Views: 109,676

Keywords: elizabeth warren, senate, senator, equifax, ceo, richard smith, data hack, breach

Id: e6fIuRqu6wc

Length: 6min 34sec (394 seconds)

Published: Wed Oct 04 2017

Reddit Comments

[u/Dholtz001]

Warren just has that remarkable ability to completely eviscerate someone while completely keeping her cool. How can you watch this video and not love her?

[u/skoooog]

Love her, but is nobody going to talk about the person in the audience behind the Equifax guy who was wearing a monocle and stroking a fake mustache in feigned concern?