On September 7, 2017 the Equifax credit-reporting agency reported a massive security breach that has exposed sensitive financial information. Equifax is one of three American credit-reporting agencies that monitor, rate, and report the financial credit histories of credit-users. Information used by Equifax is obtained from mortgage lenders, banks, credit card companies, and retailers.
Unlike typical information breaches where a company notifies its customers that their information was hacked, credit users’ information may have been in Equifax’s datasets without their being aware of it or having a prior relationship with Equifax.
Equifax has stated that the data breach occurred between mid-May and July 2017 and was detected on July 29, 2017. The data breach includes Social Security numbers, birth dates, mailing addresses, and credit card numbers of up to 143 million individuals in the United States. An unknown number of credit consumers in Canada and the United Kingdom have also been affected.
Equifax has established a website with information about the breach and to help credit consumers find out if their information was potential revealed. The website address is www.equifaxsecurity2017.com . Consumers are being offered the chance to sign up for one year of free credit file monitoring and identity theft protection even if their information was not impacted. The scope of the breach is so vast that consumers can’t immediately enroll. Consumers that choose to sign up for the free service will be given a date to return to the site and register for the service. Review of the terms of service indicates that consumers who sign up for the service may be limiting their rights to sue. Other legal experts dispute this.
This is a very serious issue that everyone who has credit through an American, Canadian, or British company should be aware of and take action to limit the potential for identity theft and fraud.
Describe three examples of the Cost of Quality in “External Failure Costs” in this situation.