On the heels of the big Equifax data breach, Republican lawmakers are trying to push for legislation to deregulate credit agencies.
According to the Federal Trade Commission, hackers were able to infiltrate Equifax’s database to access people’s names, social security numbers, birth dates, addresses, and even some driver’s license numbers.
Equifax is one of the country’s three major credit reporting agencies, and yet, the hack wasn't immediately caught. The breach reportedly lasted from mid-May through July.
Despite this recent threat to people’s security, members of the GOP are still supporting bills to make credit agencies virtually exempt from being held accountable for egregious mistakes of this nature.
The proposed legislation is part of a Republican initiative to reduce oversight of banks and other financial-services firms and to, essentially, destroy the Consumer Financial Protection Bureau, which is responsible for holding these institutions accountable for unfair and illegal practices, the Los Angeles Times reports.
Consumer advocates reportedly argue the Equifax breach indicates that the leading credit agencies — Equifax, Experian, and TransUnion — are more concerned with making money from people’s personal information rather than keeping said information safe.
“Consumers are not customers of these companies — they’re commodities,” said Chi Chi Wu, a staff attorney with the National Consumer Law Center. “We have no say over what they do with our data.”
In an ironic twist of fate, the Republicans’ credit agency bills were up for a House Financial Services Committee hearing this month on the very same day that Equifax announced that hackers may have accessed the credit files of 143 million people. Nevertheless, the lawmakers behind this proposed legislation are moving forward.
Rep. Blaine Luetkemeyer (R-Missouri) claims that the bills would “streamline regulatory requirements and eliminate inefficiencies” as well as “allow financial companies to serve their customers.”
But reality shows us that is not the case.
Instead, the legislation would reward credit agencies by reducing regulatory restrictions and lessening the amount of responsibility they are required to take for mistakes, such as a major security breach.
One of these bills — authored by Rep. Barry Loudermilk (R-Georgia) — is the FCRA Liability Harmonization Act, which would eliminate punitive damages in class action suits involving credit agencies and max actual and statutory damages involving credit agencies at $500,000.
According to Loudermilk, the bill “is aimed at curbing frivolous class action lawsuits against businesses under the Fair Credit Reporting Act.” But what it would actually do is limit the amount of money these companies have to shell out after neglecting their customers.
For example, after Oregon resident Julie Miller reported multiple discrepancies in her credit report to Equifax from 2009 to 2011, the company did nothing to resolve the issue.
Apparently, Equifax had merged Miller’s file with another woman’s who had the same name and a similar Social Security number, but the company failed to rectify the mistake.
In 2013, after filing a lawsuit against the company, Miller was awarded $180,000 in compensatory damages and $18.4 million in punitive damages. The punitive damages were later reduced to $1.62 million, however, by a federal judge who cited the precedent of previous cases.
If Loudermilk’s bill had been implemented, Miller’s compensation would have been restricted to the $180,000 in compensatory damages, with no punitive damages at all.
This bill is clearly unfair to the consumer, whose financial standing suffered for an extended period of time because the credit agency failed to fix an issue that they were responsible for.
So, why are Republicans trying to reward these unprofessional and corrupt practices? They are working in the interest of the credit institutions rather than the consumers.
Banner/Thumbnail Photo Credit: Reuters, TAMI CHAPPELL