Part I: $4 Trillion in Profit Potential when “Big Data” Becomes Too Big…
I smell a rat.
Equifax announced last week that the intensely private personal data it had in its possession for 143 million Americans had been hacked.
That’s 1 in every 2 people.
…didn’t ask to be “customers.”
…now have a lifelong problem because of Equifax.
…may never recover financially.
Yes, and to my way of thinking, deservedly so.
Equifax maintained the financial equivalent of the “Holy Grail.” Social security numbers, driver license numbers, addresses, bank accounts, date of birth, and more.
Everything needed to create a “new you.”
I’m livid and not just because all this information has been stolen, either.
What really chaps my hide is that criminals can now use this information to file tax returns, claim refunds, access medical records, rent apartments, buy houses, take out loans and more – all without you knowing for years to come.
This goes waaaaaaay beyond simple identity theft.
For instance, the IRS now has a massive problem on its hands because that agency will have to separate legitimate returns and refunds from false ones in a process that will stretch the already problem-plagued system to its very limits. At the same time, this potentially delays valuable refunds and e-filing.
Taxpayers Are on The Hook… Again
Once again, tax payers – meaning you and me – are on the hook for corporate malfeasance that potentially is so bad that it makes Big Banks look like Boy Scouts for their role in the Global Financial Crisis of 2008 that still roils markets today.
The government will likely have to increase the IRS budget using our tax dollars while average taxpayers will now have to spend more on accountants and lawyers both as part of the filing process thanks to Equifax’s mess. Certainly, in the event that there’s a problem.
Imagine what happens when a bad guy uses your social security number to create a “synthetic ID” – meaning real names and identities that are mixed with real social security numbers and addresses – and suddenly you have to prove that you never lived in Dallas and that you didn’t buy that fancy $250,000 car and default on the financing related to the $2 million home it was garaged in.
Imagine needing a simple surgery after years of being healthy only to find your insurance deductible has been used up… by someone else.
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Buying a car and being told your credit stinks… when you haven’t used a credit card in years and pay for the little debt you have on time and in full.
No doubt you get the idea. You’re going to be presumed guilty until proven innocent because Equifax has so much power over your life.
You know what really stinks, though?
Not a single American signed up for this and there is not a single regulatory body that is likely to put the company out of business. The Consumer Financial Protection Bureau and the Federal Trade Commission have both declined to comment on potential punishment as a result of what’s happened.
Worse, there’s not a damn thing you can do.
As of press time, there are 23 class action lawsuits filed since Equifax disclosed the breach, according to USA Today.
You cannot, for example, ask Equifax to stop tracking your information because you never had any say in them accumulating it in the first place.
Nor is there apparently any recourse against the three senior executives who sold nearly $2 million worth of company stock prior to announcing the breach.
One company spokeswoman, Ines Gutzmer, claims that Chief Financial Officer John. W. Gamble, U.S. Information Solutions President Joseph M. Loughran III, and Rodolfo O. Ploder, President of Workforce Solutions, knew nothing.
Puuuuullllleeeeeaaase… I was born in the middle of the night, but it was not last night.
According to the SEC, none of the sales were pre-scheduled. Every single one of these executives is a sophisticated insider with access to material non-public information.
Then, there’s the company’s response to the data theft itself.
CEO Rick Smith issued a video in a white shirt sans tie that is about as calculated a media clip as I’ve ever seen. No doubt his publicist and crisis management team carefully dressed him to appear more like a man in the street than the high-powered C-level exec he is.
I’ll give him this, though – Smith’s taken corporate groveling to a new level even though it strikes me as wholly transparent and craven.
The Company’s Solution: Just Another Marketing Ploy
That’s because the company’s solution – and I use that word with utter contempt in this instance – is to have affected consumers sign up for a free year of “protection” in the form of TrustedID Premier, an Equifax credit monitoring service (??!!)
Equifax initially required you to waive your rights over the theft when you signed up for the service but has since reportedly backed off because of consumer outrage. So, evidently, has the mandatory conversion to a paid service for the same reason.
I entered my name and I’m one of millions affected apparently.
So, too, are Mickey Mouse, Gomer Pyle, Daffy Duck and Alfred E. Newman, whose names I entered along with random six-digit “Social Security number” sequences to see if they too would be asked to sign up because their information had been compromised.
Call me crazy but it appears that Equifax is trying to use what could be the biggest phishing attack of all time as a marketing ploy to gather still more personal information.
Like Equifax needs the money.
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We’re talking about a company that took in $3.1 billion last year… that recorded $489 million in profits last year… and that spent $6 million lobbying Washington trying to prevent stricter consumer privacy laws.
Equifax’s lobbying group, the CDIA, even went so far as to say that exposure to class action suits (like the ones I imagine are being prepared around the country at this very minute) would expose the company the risk of adverse court judgements – meaning they’d have to stop selling your personal data if they were held liable for data breaches or misuse.
Now there’s a concept – hold Equifax and any other company housing your personal data accountable with both harsh criminal and civil penalties.
Given what’s happened, I cannot think of a greater, more singular abuse of market power in any industry… ever.
As I noted on Varney & Co. Monday morning, the situation “ought to serve as a wakeup call” to every company dealing in private data that consumers have had it.
To paraphrase Lauren Saunders, who is associate director of the National Consumer Law Center, justice should not be “up to the company’s choice.”
And what does this mean for your money, exactly?
I’m glad you asked.
Personally speaking, this situation stinks. There’s no mistake about it but professionally speaking, I’m very excited.
Never forget something we talk about all the time – chaos always creates opportunity.
The only question is how you play it.
Last time we saw a major corporate upheaval like this, Big Tobacco companies were forced to dish out a historic sum of money in perpetuity to those affected.
This became known as the Master Settlement Agreement.
And it stipulated that for the first 25 years of the deal, a bare minimum of $206 billion was to be awarded to those eligible to collect.
It may surprise you to learn that, thanks to a little-known investment, you could personally claim a tax-free portion of this settlement.
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I’ll be back Friday with some thoughts on how to organize your thinking so that you maximize the profit potential that’s headed your way as well as the one thing you absolutely must do to protect yourself and your money today.
Until next time,