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CFPB, House Financial Services Committee begin investigating Equifax data breach

Congressional hearings are coming

The fallout from Equifax’s massive data breach that exposed the personal information of 143 million U.S. consumers is just beginning.

The credit reporting agency disclosed Thursday that “criminals exploited a U.S. website application vulnerability to gain access to certain files,” which included the names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers, of approximately 143 million consumers.

The company is offering various forms of protection for the affected consumers, but if the company thought that would put an end to the situation, it was wrong.

In the wake of the company’s announcement, the Consumer Financial Protection Bureau, the House Financial Services Committee, and the office of New York Attorney General Eric Schneiderman stated that each is launching an investigation into the breach.

In a statement provided to HousingWire, CFPB Senior Spokesperson Sam Gilford said the bureau is already looking into the situation.

“The CFPB has authority over the consumer reporting industry, including supervisory and enforcement authority,” Gilford said in the statement.

“The CFPB is authorized to take enforcement action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws,” Gilford added. “We are looking into the data breach and Equifax’s response, but cannot comment further at this time.”

Additionally, Gilford said the CFPB is looking into the arbitration clause inserted into Equifax’s credit monitoring.

As CNN points out, consumers who want to take Equifax up on its offer of free credit monitoring for a year have to waive their right to sue, something that the CFPB is currently battling over on Capitol Hill.

“Equifax’s credit monitoring product contains a mandatory arbitration clause that denies people their right to join together to sue the company for wrongdoing,” Gilford said.

“It is troubling that Equifax is forcing people to waive legal rights in order to receive fraud monitoring after the company’s breach put their personal information at risk,” Gilford concluded. “Equifax could remove this clause so that consumers can receive this service without condition.”

The issue of Equifax including the arbitration clause also caught the attention of Schneiderman. On Friday, he tweeted: “This language is unacceptable and unenforceable. My staff has already contacted @Equifax to demand that they remove it,” in reference to the arbitration clause.

Schneiderman also said that his office is launching an investigation into Equifax.

Schneiderman’s office noted that of the 143 million consumers affected by the breach, 8 million are from New York.

“The Equifax breach has potentially exposed sensitive personal information of nearly everyone with a credit report, and my office intends to get to the bottom of how and why this massive hack occurred,” Schneiderman said. “I encourage all New Yorkers to immediately call Equifax to see if their data was compromised and to consider additional measures to protect themselves.”

On Friday, the House Financial Services Committee also announced that it plans to hold a hearing over the Equifax data breach, and if Wells Fargo is any precedent, it won’t be a pleasant hearing for the Equifax executives.

“This is obviously a very serious and very troubling situation and our committee has already begun preparations for a hearing,” House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, said Friday.

“Large-scale security breaches are becoming all too common,” Hensarling added. "Every breach leaves consumers exposed and vulnerable to identity theft, fraud and a host of other crimes, and they deserve answers.”

Hensarling’s counterpart on the Democratic side, Rep. Maxine Waters, D-Calif., agreed.

“This hack into sensitive information compiled and maintained by Equifax is one of the largest data breaches in our nation’s history and someone has to be held accountable,” Waters said.

“Given the important role credit scores play in the lives and financial futures of hardworking Americans, Congress must diligently examine the way our credit reporting agencies are operating and impose additional statutory and regulatory reforms to protect the integrity of the country’s credit reporting system,” Waters continued.

“I have long advocated for an overhaul of our nation’s credit reporting system and I will reintroduce legislation that will enhance consumer protection tools available to minimize harm caused by identity theft,” Waters concluded. “Beyond the steps they have already taken, Equifax should at the very least offer free credit freezes to all of those affected by this deeply troubling incident.”

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