Advantages and Disadvantages of a Class-Action Lawsuit Against Equifax
The Equifax mega-breach sparked a class-action lawsuit. The company has agreed to settle for $300 million and offer its customers free credit monitoring services. But class-action lawsuits come with their own set of disadvantages. In this article, we’ll look at some of the advantages and disadvantages of pursuing a class-action lawsuit against Equifax. You’ll also learn why a class-action lawsuit is not for everyone.
Equifax mega-breach led to a class-action lawsuit
The recent Equifax mega-breach has spawned a class-action lawsuit and a federal investigation. The cyberattack compromised the personal information of 145 million Americans. In the days and weeks following the breach, the company failed to adequately safeguard its systems and did not properly notify consumers about the risks. The breach and the resulting damage to the company’s reputation have caused a class-action lawsuit.
The company’s response to the breach has been criticized by the New York attorney general Eric Schneiderman. The New York attorney general issued a consumer alert, began an investigation, and requested more information from the company. A hearing has been scheduled for the Equifax mega-breach in the House Committee on Financial Services, and Sen. Tammy Baldwin has urged the Senate Commerce, Science, and Transportation Committee to hold a hearing as well.
Equifax agrees to pay $300 million
In a landmark settlement, Equifax has agreed to pay more than $300 million to American consumers. The settlement includes $275 million in fines and a supplementary fund of $125 million to compensate consumers for out-of-pocket expenses associated with their credit reports. The funds are intended to cover the costs of credit monitoring and freezing, as well as the costs of identity theft protection. But this isn’t the end of the settlement for consumers.
The settlement also includes $1 billion for improved security. Consumers will get the rest of the money in the form of better security measures. Meanwhile, Equifax will pay $100 million to the Consumer Financial Protection Bureau and $175 million to the states. If the Equifax settlement funds are not exhausted, the company will be required to make additional payments to the states and the Consumer Financial Protection Bureau. As part of the settlement, it will also set up a Consumer Restitution Fund of at least $425 million.
Offers free credit monitoring service
As part of the settlement, Equifax is providing affected individuals with free credit monitoring services. The free service is a valuable tool to spot fraudulent activity on your credit report. You can access your credit report via a personal finance website, your bank, or your credit card issuer. To sign up, simply follow the instructions provided. You will receive six free reports per year, and each report will give you personalized insight into your credit.
Consumers can register for free credit monitoring for four years. The service is also available for six years. Consumers who have already purchased a credit monitoring service can get an additional $125 as alternative compensation. The settlement also includes up to $20,000 in compensation for out-of-pocket expenses, such as credit monitoring and identity theft. Those who do not want to keep track of their time and expenses can apply for $250 in cash compensation.
Disadvantages of class-action lawsuits
The benefits of class-action lawsuits are numerous. The vast majority of people win more money than they would have with an individual lawsuit, and they also share in the recovery if the class action is successful. Nevertheless, there are some disadvantages to class-action lawsuits, too. Specifically, these lawsuits often discourage companies from engaging in illegal or fraudulent practices. However, the risks involved are still too high to consider them a bad option.
While the recent Equifax data breach affected both the United States and Canada, class-action lawsuits are not as effective when the number of people affected by the breach is small. While these two agencies may be able to work together, they are not the same thing. As a result, class-action lawsuits often lack the power to pursue a large company. Even if the class-action lawsuits are successful, the cost-benefit ratio of a class-action lawsuit is high, and the plaintiffs’ chances of winning are low.
Issues with Equifax lawsuit settlement
The current crisis at Equifax threatens the company’s survival and CEO Richard Smith’s job. In the past, corporate America faced existential crises, such as the Tylenol product tampering scandal, BP’s oil spill, and JetBlue’s ice storm. Now, Equifax has a new crisis: hackers stole personal information from their credit files. This data includes names, birth dates, addresses, and Social Security numbers.
A recent data breach at Equifax exposed the personal information of 147 million people. Equifax denied wrongdoing but agreed to settle the class action lawsuits and pay up to $425 million. In addition, the settlement allows Equifax to reimburse consumers for the costs of credit monitoring and freezing credit. This is good news for consumers, but there are a few issues that are bothersome for those who may not qualify. The company has already agreed to pay some of the costs associated with the data breach, but the deadline to file a claim has passed.