Ghavri: Financial Feudalism
American consumers deserve compensation from Equifax.
It was announced earlier this month that Equifax, a consumer credit reporting agency, was hacked and the personal and financial information of consumers stolen. It was also recently revealed that Equifax knew about a significant breach of its network in March of 2017, five months before it was disclosed publicly. The company has stated that the hack in March was unrelated to the recently disclosed breach in which millions of American consumers’ personal information was stolen, which is questionable considering both incidents reportedly involved the same hackers.
American consumers should have some form of compensation for Equifax’s incredible negligence in allowing the personal financial information of over 143 million Americans to be compromised. Essentially, if you’ve ever engaged in any financial undertaking requiring a credit report, your social security number, address, birth date and potentially even your personal financial information has been compromised due to Equifax’s poor cybersecurity and the negligent way in which the credit reporting agency responded to its hacking. The executive director of the World Privacy Group Pamela Dixon said, “If you have a credit report, chances are you may be in this breach. The chances are much better than 50 percent.”
This will create a hardship and injustice for a struggling American middle class by forcing them to monitor their credit reports, dispute fraudulent activity, cope with decreased credit scores and freeze their credit reports. This comes at a time when the middle class is living paycheck to paycheck and credit reporting agencies and credit card companies take home record profits. This will stifle genuine bottom-up and middle-out economic growth in America.
This is financial feudalism, extracting wealth from the middle and working classes and giving it to banking executives while those in power preach “personal responsibility.” The average American household has $137,063 in debt, with an average of $1,300 in payments per household per year for credit card interest alone according to NerdWallet. Equifax provided resources to customers to check if their personal financial information has been compromised — but the system does not work and returns random results and results for fake entries, showing further negligence and contempt for consumers.
If this is not contemptuous and negligent enough, Equifax executives waited months after the March hack to disclose it to the public and have the nerve to argue that the March hack and the recently revealed theft of 143 million consumers’ personal information are “unrelated.” Moreover, the Department of Justice is investigating Equifax executives for potential insider trading for selling their stock in the company between the March of 2017 hack and the disclosure of any intrusion in September to the public. How convenient that two “unrelated” hacks committed by the same intruders occurred and Equifax executives were able to sell their holdings before publicly disclosing either.
Senators and representatives in Congress should introduce a bill requiring all Americans’ credit scores to be reset, with preexisting debts and payment and repayment arrangements with companies being grandfathered in, but all missed payments, defaults and bankruptcies to be wiped clear from their credit reports and financial histories. Americans deserve a clean slate. Additionally, a “do not call”-style government database should be instituted to allow instantaneous and free freezing and unfreezing of credit reports. Moreover, the bill should make it as easy as possible to dispute and remove new activity and fraudulent accounts on credit reports reported to agencies on any date after the hack.
When a member of the struggling American middle class misses a payment or two on their lines of credit or mortgage, their credit scores are affected severely and their opportunities for credit and loans jeopardized. Why should big corporations and financial executives not be punished in the same harsh manner for negligence and financial crimes? How many Americans working multiple jobs will now have to take time to dispute fraudulent activity on their credit histories due to this hack of Equifax? How many Americans live paycheck to paycheck due to credit card payment slavery and inadequate personal financial education and protections? This bill would stimulate the economy by providing Americans with a second chance and new opportunities to start businesses, buy cars, or get that new job that they could not before due to a poor credit history.
I recognize that much of what I propose is currently impractical considering the corporate ownership of Congress. Most congresspeople have a personal financial interest in or are supported by Wall Street and corporate America. Still, this is a once-in-a-generation opportunity for Congress to work on behalf of consumers. Massachusetts Sen. Elizabeth Warren recently introduced the Freedom from Equifax Exploitation Act which would make freezing and unfreezing credit reports free. The bill upholds the idea that Equifax’s negligence is directly causing millions of Americans to freeze their credit and that Equifax should not be able to profit off of those freezes. The bill would also make uniform the federal process for freezing credit, make illegal the selling of consumer data for marketing purposes while someone’s credit is frozen, improve fraud alerts for consumers, allow consumers to obtain an additional free credit report per year and entitle consumers to a refund from Equifax if they paid for a post-hack credit freeze.
Congress should work on behalf of consumers and the middle and working classes, not function as intermediaries in a system of financial feudalism. Let us make an example of Equifax.