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The Equifax Breach: Part One Analysis

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.

In regard to how Equifax and other credit reporting agencies obtain their information, the answer is a bit eclectic. While creditors do report to these agencies, not all do, and it is difficult to know for certain the nature and extent of their information sharing mechanism.  In addition, information from debt collectors or publicly-available documents, like bankruptcy proceedings, may be incorporated into a credit reporting agency’s files. This would mean there is likely no way to truly “hide” one’s information from a credit reporting agency.  After all, the consumers are not true customers of the credit reporting agency, but more like the product.

While there are certain services a consumer can purchase from Equifax (e.g., credit report, credit freeze), however, this is not the only purpose of the business.  The average consumer is not the primary beneficiary of Equifax’s business model. They may benefit from it due to faster and more efficient extensions of credit, but these credit reporting agencies have a profit motive in collecting and distributing valuable information to interested parties. To that extent, Equifax is akin to a financial and credit information collecting entity.

What is the importance of the leak?

Given that Equifax collects information on almost everyone, from almost every source available, it stands that a breach of Equifax, Experian, or TransUnion would be potentially devastating to the affected consumers. With a leak of personally identifying information (e.g., name, address, age, social security number) identity theft would be much easier for a perpetrator to perform. This information may then be shared, sold, and distributed through the “dark web.”  On a side note, it is ironic that certain credit protection organizations can benefit as the demand for credit freezes (which often require a fee) increases with time.  Even in cases where entities may be distributing these services for free, it may come with limitations to prevent recovery from future harm.

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