Equifax Might Owe You $125 — But There’s a Catch

Credit MonitoringConsumers occasionally receive a notice in the mail informing them of a class action settlement. Follow the instructions on the card and, if you are eligible to participate as a class member, you might receive something of value.

While the notices are generally written in plain English, consumers sometimes regard them with suspicion. They might be mistaken for an unwanted advertisement and discarded. Recipients who take the time to wade through the fine print might learn that they will only receive a discount coupon for something they don’t want.

Consumers might also wonder whether they are eligible for the settlement at all. Who remembers if they might have incurred an overdraft fee at a bank several years ago? The fact that a consumer receives the notice suggests that the recipient is probably eligible to participate in the settlement, but consumers might decide to forego participation rather than courting trouble by claiming something to which they might not be entitled.

The good news for people who receive notice of an Equifax settlement is that they are probably eligible to share in the settlement. There is even better news for consumers who are receiving credit monitoring services. Those consumers might receive as much as $125 to compensate them for the time and expense involved in signing up for credit monitoring.

Consumers who do not have credit monitoring can obtain free credit monitoring for ten years. There is very little to lose by participating in the settlement and eligibility is easy to verify.

What Is the Equifax Settlement?

Equifax is a credit reporting bureau. It issues reports to banks and other businesses that want to assess the creditworthiness of customers. To that end, Equifax maintains a massive amount of data about individuals, ranging from social security and driver’s license numbers to credit card information.

In 2017, hackers gained access to the private information stored by Equifax. The data breach exposed the personal data of about 147 million people.

Fortunately, there is no evidence that the stolen data has been widely distributed. Unfortunately, since there is no way to know whether the data might lead to identity theft in the future, many consumers spent time and money to take precautionary measures against being victimized. Enrolling in a credit monitoring service was one of those measures.

Consumers began a class action lawsuit against Equifax to recover compensation for the expense and inconvenience of protecting themselves from the consequences of the data breach. That lawsuit recently settled.

Consumers are eligible to participate in the settlement if their data was accessed in the data breach. Equifax has set up a webpage that consumers can use to determine whether they are eligible for a settlement benefit. Eligible consumers can make an online claim even if they do not receive a formal notice of eligibility in the mail.

Settlement Terms

In addition to a promise to improve its security, Equifax has agreed to provide certain benefits to consumers who were affected by the breach. Consumers who can prove that they spent time and money either protecting themselves or recovering from identity theft can make claim for reimbursement of their actual losses. That claim is limited to $20,000.

Alternatively, consumers who enrolled in a credit monitoring program can make a claim for a $125 cash benefit. That benefit is payable regardless of the cost incurred for credit monitoring. Since some credit monitoring services are free, a consumer might receive $125 as compensation for the time spent enrolling in credit monitoring even if no other expense was incurred.

Finally, consumers who have not signed up for a credit monitoring service can get free credit monitoring for ten years. The first four years of monitoring will be provided by Experian and will include identity theft insurance coverage. Experian monitors information reported to all three credit reporting bureaus. The final six years of monitoring will be provided by Equifax and will not include information reported to the other credit reporting bureaus.

Most eligible consumers must file a claim by January 22, 2020. Failing to meet that deadline will probably cause eligible consumers to lose their right to receive benefits for past losses. Claims for future losses can be made as they occur, up until January 22, 2024.

The Catch

The settlement requires Equifax to set aside approximately $380 million to pay settlement costs, including the benefits and attorneys’ fees and expenses. Some of that money will be used to reimburse consumers who experienced significant financial harm because of the data breach.

Only about $31 million of the settlement will be used to fund the $125 payments. If $31 million is insufficient to pay the claims, the $125 payments will be reduced proportionally. A consumer who makes a claim for $125 might therefore receive much less, although it may be some time before the consumer learns what the final payment will be.

The FTC is urging consumers to opt for the free credit monitoring benefit. However, consumers can obtain free credit reports every year from each bureau and can sign up for free credit monitoring from companies that offer that service to consumers who agree to receive recommendations about financial products. And since a free credit freeze offers more protection against identity theft than credit monitoring, it might still be advisable to make a claim for the cash benefit.

While the claims may quickly exhaust the $31 million fund, resulting in payments of much less than $125, the FTC has not made clear to consumers that after January 22, 2024, any money remaining in the total $380 million settlement fund will be allocated to paying the $125 claims. Unless the stolen data is actually used to defraud a substantial number of victims, a good bit of the settlement fund should be available to pay the balance of those claims. Consumers might need to wait a few years, but they might eventually receive the full $125 (or a significant part of it) if they opt for a cash benefit rather than credit monitoring.

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