Insights & Analyses

Equifax hack fallout leads to ouster of company’s CEO as lawsuits mount

September 27, 2017

The massive data breach at Equifax has claimed another victim — the company’s CEO, who it was announced this week will be “retiring” from the company. Meanwhile, legal action against the beleaguered credit reporting agency continue to grow, with a new suit filed in San Francisco and another one expected to come from Chicago.

Equifax this week announced the retirement of Chief Executive Richard Smith, who will still receive $18 million in benefits following his ouster at the company.

Paulino do Rego Barros Jr., who was the company’s president of the Asia Pacific region, will serve as interim CEO as a search for a new leader begins. Barros has been with Equifax for 7 years.

The executive shakeup comes as legal challenges for the company continue to mount. This week, the San Francisco City Attorney filed a lawsuit accusing the company of failing to allow Californians to protect themselves, according to CNBC.

Separately, the city of Chicago is said to be planning its own lawsuit against the company, according to the Chicago Sun-Times. And in New York, the Department of Financial Services has issued a subpoena seeking more information, suggesting it too could pursue legal action.

The state and local lawsuits join an investigation already under way by the U.S. Department of Justice, which is cooperating with the FBI and Securities and Exchange Commission in probing for potential criminal activity.

Shares of Equifax have lost some $4.5 billion in value since it was announced on Sept. 7 that personally identifiable data of up to 143 million people may have been exposed in a massive data breach. Information including Social Security numbers, birth dates, addresses and driver’s license numbers was said to have been vulnerable in the hack, which affects nearly 60 percent of adults in the U.S.

Given the scope of the breach, representing one of the largest and most sensitive leaks in history, many have taken to initiating a credit freeze to help ensure their identity is stolen. Equifax is one of the “big three” credit scoring bureaus in the U.S., and its data is used for everything from opening a bank account to obtaining a home mortgage.

For more on credit scores and identity, see the OWI Labs intelligence report Bad Credit? No Credit? Big Identity Problem, which includes a proprietary framework for understanding the credit and trust scoring ecosystem based around one fundamental organizing principle: identity data. The report enables investors and entrepreneurs to gauge market opportunities and potential challenges emerging in the broad and dynamic credit scoring and trust assessment landscape.