October 03, 2017 08:07 PM
The former chairman and CEO of Equifax faced the fire before members of U.S. House Committee on Energy and Commerce. It’s one of three scheduled congressional hearings this week and comes just one day after Equifax disclosed that an additional 2.5 million Americans were likely affected by the breach. That brings the number to a mind-blowing 145.5 million people. I dissected this hearing with this question in mind: “What is Equifax doing now to protect consumers?”
The more than three hour hearing began with Rick Smith enduring a tongue-lashing from congressional committee leaders. It was the first indication that the grilling of Rick Smith was going to be grueling.
“I’m truly and deeply sorry for what happened," he told the committee in a soft-spoken mea culpa.
It gave a whole new meaning to Mister Smith goes to Washington.
"How does this happen when so much is at stake?” asked Representative Greg Walden, an Oregon Republican. “I don't think we can pass a law that fixes stupid. I can't fix stupid."
Ouch... But the facts remain. Equifax failed to fix a software vulnerability that it had known about for months. Now almost 146 million Americans are at risk.
"Equifax deserves to be shamed in this hearing," said Representative Janice Schakowsky, a Democrat from Illinois. It was indeed a public shaming. But she went on to detail a piece of legislation she’s sponsoring along with Representative Frank Pallone, a New Jersey Democrat. It would require credit reporting agencies like Equifax have robust security, report breaches immediately, and it would also give additional protections to consumers after a breach.
But the hearing also raised questions - specifically the difference between a credit lock and a credit freeze. Equifax says in January it will offer consumers credit locks which let consumers lock and unlock their credit for free. But committee members had lots of questions, and some were skeptical.
Representative Pallone told the committee that consumer advocates suggest locks are weaker than credit freezes. That's because credit freezes are regulated. Locks are not, so the credit rating agencies can make their own rules. For example, when you sign up for credit locks through Experian, the company makes you sign up for its credit monitoring and charges a monthly fee of $4.99 to $24.99.
Still Smith supported the Equifax lock when questioned by committee members.
"I recall that one of my colleagues asked whether a credit lock is the same as a credit freeze, and you said it was,” said Representative Doris Matsui, a Democrat from California.
“As far as protection to the consumer congresswoman, it is” Smith replied. “As far as to lock or unlock or freeze or unfreeze - a lock is more consumer-friendly."
So now consumers are likely asking the question: Should I lock my credit or freeze it? There’s little doubt that locking your credit may be more convenient because if you need to open a new line of credit, you can unlock your credit without a PIN. For example, Smith promises the new Equifax product will allow consumers to unlock your credit through an app. With a freeze, a PIN is required and in some cases unfreezing your credit may take longer.
But consumer advocates still overwhelming recommend freezing rather than locking it. Because freezes are government regulated, credit agencies can only charge you $2 to $10 for the freeze. And even if Equifax does begin offering a locking product that is user-friendly in January as promised, remember you still must lock or freeze your credit with all three agencies. Just locking your credit file with one agency is of little benefit.
For that reason, Deanna’s Do List will continue to recommend freezing your credit with all three credit reporting agencies as likely the best protection for most consumers.
Created: October 03, 2017 08:07 PM
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