Just short of 2 weeks ago, the FTC and Equifax announced a settlement in the huge data breach suffered by Equifax. The terms of the settlement allowed for a variety of options for those affected. The two most popular items were a cash payment of $125 or credit monitoring for 10 years. It appears, however, that the FTC and Equifax didn’t set aside enough money for folks who want the cash payment. This week, the FTC announced that it is recommending that you choose the credit monitoring. According to the FTC,
But there’s a downside to this unexpected number of claims. First, though, the good: all 147 million people can ask for and get free credit monitoring. There’s also the option for people who certify that they already have credit monitoring to claim up to $125 instead. But the pot of money that pays for that part of the settlement is $31 million. A large number of claims for cash instead of credit monitoring means only one thing: each person who takes the money option will wind up only getting a small amount of money. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.
The updated announcement reminds us of the effects of a data breach. As I wondered last week, what will happen if that website you used to create your will gets hacked? Maybe they will offer credit monitoring? Or some other type of “monitoring” to supposedly protect your identity?
What Happens Now?
As with most major news stories, there are a few takeaways for you to consider. First, if you were affected by the Equifax breach, you need to make sure to claim your settlement. It looks like credit monitoring will be a lot more valuable than a cash settlement at this point.
Second, if you’ve ever been involved in litigation, you probably know how much settlement talk goes on. The statistics bear out that over 99% of cases settle without a trial. But as we are learning from the FTC, settlements aren’t always perfect. In this case, it appears that the FTC did not anticipate such a strong demand for cash payments. Or possibly, they underestimated the number of people who already have credit monitoring. Regardless, a settlement needs to take these things into consideration before being signed.
Finally, it’s a good reminder that you need to make sure your personal information is secure. These days, our personal information seems to be in too many places to count. Whether it’s your financial information or your family’s information in an online website that is dropping what you type into some generic form, you need to consider where your data is and whether it is safe.
Now is a good time to look at how you are storing your important information. If you’d like a copy of the My Personal Planning Essentials checklist used by my clients with their estate plan envelopes, click here and I’ll be glad to share a .pdf with you.