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Equifax’s Settlement of $700 Million Is a Joke

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Fresh off of news that Facebook, Inc (NASDAQ:FB) was facing a fine of $5 billion from the SEC for its Cambridge Analytica scandal, we’ve learned that Equifax (NYSE:EFX) will compensate the 146+ million users that were affected by its breach up to $700 million. While not every user is going to claim the benefits, this would effectively cost the company whose sole business it is to protect customer data, less than $5 per use whose information it failed to adequately protect. That’s not even a slap on the wrist.

There’s nothing to be learned from Equifax from this because if it costs just $5 per user impacted by such a breach, then where is the deterrent for the company to actually do a better job of protecting its customers? It’s probably cheaper for the company not to improve anything if these are the consequences it could end up facing. Sure, future breaches could be worse and more costly, but this is far too weak of a settlement given both the magnitude and the sensitivity of the information. Equifax’s whole job is protecting sensitive information, and yet, investors have forgiven the company for such a fundamental failure.

Before the breach was revealed, the stock was trading at over $140, and it’s near that price point today. It’s both disappointing and unsurprising that investors can have such short memories or blatant disregard for a company that has failed to perform its core operations. Sadly, there’s little hope for things to improve and for companies to start taking their responsibilities more seriously if these are the types of punishments they will face.

Disclaimer: The author of this article does not hold any shares of the stock(s) mentioned above. This article is not a substitute for financial advice and this is not intended to persuade investors to buy or sell the stock(s) mentioned. Investors are recommended to seek professional investment advice or do their own analysis before making a stock purchase.