On September 7th, Equifax, one of the three credit reporting agencies in the United States, announced that it had been the victim of a massive cyber-security breach that impacted roughly 143 million U.S. consumers.
The cyber-attacks, which reportedly occurred between mid-May and July of 2017, involved cybercriminals getting their hands on personal data, including Social Security numbers, birth dates, addresses, and even driver license numbers. In addition, Equifax confirmed that a minimum of 209,000 consumers had their credit card credentials illegally accessed.
As one can imagine, the fall-out from the Equifax breach has been massive and far-reaching. The day after the breach was announced, Equifax shares dropped 13 percent on Wall Street. There has been no shortage of lawsuits either, and one firm is reportedly seeking $70 billion in damages, which would be the largest class-action lawsuit in U.S. history.
On September 26th, Equifax announced that Richard F. Smith, Chairman and CEO of the credit bureau, had stepped down from his position.
Presumably, the legal ramifications from something as massive as the Equifax breach will take years to iron out. In the interim, we polled 1,000 Americans to discover their thoughts on the cyber-attack that directly impacted well over a third of Americans, as well as their opinions on the credit bureaus in general.
Credit-Reporting Complaints Up Across-the-Board, Equifax on Pace for 32% Year-Over-Year Complaint Increase
LendEDU's research team has taken some time to review the credit bureau section of the Consumer Financial Protection Bureau's (CFPB) complaint database. We found some interesting, but not shocking, trends pertaining to the Equifax and the credit bureaus, as a whole.
For starters, when this data was pulled by LendEDU on September 19th, 2017, the CFPB had received 160,664 complaints in total so far in 2017.
Out of those 160,664 total complaints, 51,696 were listed as "credit reporting related" complaints. Representing 32.17 percent of all complaints, "credit reporting related" complaints were the largest type of grievance.
Doing some math to account for the remaining days of 2017, we found that the CFPB is on track to receive 72,295 "credit reporting related" complaints this year. When the data is projected, "credit reporting related" complaints will have experienced a 67 percent year-over-year increase from 2016.
Now comes the fun part.
Of the 51,696 total "credit reporting related" CFPB complaints, 42,258 of them were specifically filed against one of the three major credit bureaus: Equifax, TransUnion, or Experian. The grievances made against the major credit bureaus represent 81 percent of the total CFPB complaints filed as "credit reporting related."
Additionally, when the remaining days of 2017 are accounted for, the three major credit bureaus are on pace to receive 59,096 CFPB complaints this year. This number represents a major uptick from the 41,792 complaints filed in 2016, or a 41 percent increase.
Anyone want to take a guess as to which of the three credit bureaus is responsible for the most CFPB complaints in 2017?
If, for whatever reason, you guessed Equifax, you are correct. In 2017, Equifax has received 14,742 CFPB complaints, while Experian has received 13,794, and TransUnion is responsible for 13,722.
According to LendEDU's projections, Equifax is on pace to finish 2017 with 20,616 CFPB complaints, up 32 percent from last year.
More Than Half of Americans Believe Equifax Should Lose Ability to Act as a Credit Bureau
LendEDU commissioned a poll of 1,000 American consumers ages 18 and up to better understand their thoughts on the Equifax cyber-breach.
To begin the poll, we first asked all 1,000 respondents the following question: "On September 7th, 2017, Equifax announced a cyber-security incident (breach) involving consumer information. Are you aware of the incident?"
Not surprisingly, a healthy majority of Americans, 84.20 percent, have indeed heard of the Equifax cyber breach. The remaining 15.80 percent had not yet heard of the Equifax breach, which is actually quite impressive in today's age of 24/7 media.
So as to not taint the results of the remaining questions, the answers to each of the next five questions were broken down into two respondent pools: (1) Those who had heard of the Equifax breach, (2) Those who had not heard of the Equifax breach.
LendEDU will be discussing the responses from the pool of respondents that had heard of the Equifax cyber-security breach.
Equifax: A Credit Bureau No Longer? 54% Agree With Such a Measure
The next question was posed to the 842 poll participants that had heard of the Equifax breach: "In your opinion, do you believe that Equifax should lose its ability to act as a credit bureau in the U.S. following this incident?"
As one can see from the accompanying infographic, 54.16 percent of Americans do in fact believe that Equifax should lose its ability to act as a credit bureau in the U.S. following the cyber-security breach. Only 17.81 percent still believe that Equifax should remain a credit reporting agency, while 28.03 percent have yet to formulate an opinion.
Stripping Equifax of its ability to act as a credit bureau would certainly be quite a drastic measure, especially when you consider there are only two other major credit reporting agencies. In reality, the chance of this extreme action actually happening is very slim. However, the fact that a clear majority of Americans support the measure speaks volumes about the impact the Equifax cyber breach had on so many consumers.
Most Americans Have Yet to Check If the Equifax Breach Impacted Them
We asked our pool of respondents the following question: "Have you checked to see if you've been affected by the Equifax cyber-security incident (breach)?"
More than half of American consumers, 55.11 percent, have not yet checked to see if they were a victim of the Equifax cyber-security breach. 44.89 percent have already checked to see if their information was hacked, one can only hope they got back good news.
American consumers do have the ability to check if their sensitive information was stolen as part of the Equifax cyber-security breach. The Federal Trade Commission (FTC) has outlined the necessary steps to be taken if you wish to discover if you were a victim of the breach or not.
In the early days after news of the Equifax incident broke, there was much controversy surrounding a consumer's right to check if their information was hacked or not. Initially, if consumers went through the Equifax website to see if they were hacked and undertook the necessary steps, they forfeited their rights to join any future class-action lawsuit brought against the credit bureau. Equifax slipped this into the fine print of the consumer's agreement. However, after this loophole was discovered, Equifax succumbed to wide-spread pressure and removed that clause from the fine print.
Which brings us to the next question of the poll....
More Consumers Planning to Join Lawsuit Against Equifax Than Those That Have No Plans for Legal Action
The subsequent question was posed to our respondents: "Do you plan on joining a class action lawsuit against Equifax as a result of the cyber-security incident (breach)?"
As it stands today, slightly more Americans plan on joining a class action lawsuit against Equifax (26.48%) than those who have no intentions of joining such a lawsuit (24.58%).
While that statistic alone should leave Equifax with an uneasy feeling, the most intriguing data-point was the 46.32 percent of respondents that are not yet sure of their legal intentions. That 46.32 percent will determine if Equifax will be dealing with a potential record-breaking class action lawsuit or a less formidable, but still consequential legal battle.
How Equifax handles the fall-out from the cyber-security breach will be key in mitigating the potential for massive class action lawsuits. If they demonstrate true remorse, take responsibility, and try their best to help impacted consumers recover as fast as possible, than perhaps many Americans that are included in that undecided 46.32 percent will decide not to pursue legal action.
What Role Do Americans Believe the Government Should Play When It Comes to the Credit Bureaus?
Respondents were presented with the following question: "In your opinion, would you feel more or less secure if the credit bureaus (ex. Equifax, Experian, TransUnion) were government-run agencies instead of for-profit corporations?"
A few more of our respondents (25.30%) said they would feel more secure if the credit bureaus were government-run agencies when compared to those who stated they would feel less secure if the government took control of the credit reporting agencies (19.83%).
However, the most telling group of poll participants were the 40.38 percent who responded with the following: "Neither more nor less secure." The plurality of American consumers chose this answer, and that speaks volumes regarding the lack of faith Americans have in both the government and the private market.
Massive private companies, such as Equifax, continue to succumb to cyber-security breaches, but simultaneously, the U.S. government can be characterized as gridlocked, ineffective, and prone to corruption and incompetence. In summation, why would American consumers have any reason to put more faith in the U.S. government over the private market, or vice versa? They both do little to warrant trust, and this poll question reveals that sentiment.
An additional 14.49 percent of respondents said "I don't know."
In the next government-related question, we asked our respondents this: "To what extent do you agree or disagree with the following statement?: 'Lawmakers should enact stricter legislation and oversight to protect consumer credit information in the hands of credit bureaus.'"
The absolute majority of respondents, 57.48 percent, "strongly agreed" with the statement. 25.53 percent, the next highest percentage, "somewhat agreed" with the statement. Another 14.13 percent of poll participants answered "neither agree nor disagree," while 1.78 percent "somewhat disagreed," and 1.07 percent "strongly disagreed."
Of course, we are asking the respondents to answer this question at a moment in time when resentment, and a general lack of trust, towards the credit bureaus, especially Equifax, is at an all-time high. Those feelings likely contribute to the collective 83.01 percent of respondents that either "strongly agreed" or "somewhat agreed" to the idea of legislators enacting stricter oversight of the credit bureaus.
Nonetheless, very few American consumers were opposed to the idea of stronger regulations against the credit bureaus, which should be kept in the minds of many politicians as the 2018 midterm elections quickly approach.
For the first part of this report, all complaint-related data was pulled from the website of the Consumer Financial Protection Bureau (CFPB). LendEDU pulled the data from the CFPB's website on September 19th, 2017. The CFPB's complaint database lists out all complaints made so far in a given year, what the complaint is related to, and what specific entity the complaint is filed against. All data found in the first section of this report was reported by LendEDU as it was found on the CFPB complaint database, with the exception of the projections. Projections were made by LendEDU and were based on the amount of remaining days in 2017 and the pace at which complaints were being received during 2017.
For the second section of this report, all data seen derived from a poll commissioned by LendEDU and conducted online by polling company OnePoll. In total, 1,000 American consumers ages 18 and up were polled. The first question asked respondents the following: "On September 7th, 2017, Equifax announced a cyber-security incident (breach) involving consumer information. Are you aware of the incident?" Respondents that answered "yes" to this question were the ones that were included in the data that can be found in the rest of the report. Respondents that answered "no" were still able to complete the poll, but their votes were not included in LendEDU's analysis. In total, 842 respondents answered "yes" to the aforementioned question. This poll was conducted over a three-day span, starting September 20, 2017 and ending September 22, 2017.
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