Equifax $125 Payouts in Jeopardy, but Credit Monitoring Option 'Much Better Value' Anyway, Government Says

Equifax Headquarters
Sign with logo and a portion of the main building are visible at the headquarters of credit bureau Equifax in downtown Atlanta, Georgia, September 20, 2017. Smith Collection/Gado/Getty

The Federal Trade Commission (FTC) is warning consumers whose personal data was stolen in the Equifax data breach that they might not be able to claim a key benefit from the class-action settlement: a $125 payout as an alternative to free credit monitoring services.

But the agency is claiming that credit monitoring provides a "much better value" to consumers anyway, in part because public interest in the payments "has been overwhelming," so individual consumers would likely never see the full check for $125.

"The Federal Trade Commission is urging consumers affected by Equifax's 2017 data breach to consider signing up for the free credit monitoring offered as part of the settlement," the FTC said in a statement Wednesday. "A new FTC blog post notes that because of high interest in the alternative cash payment under the settlement, consumers who choose this option might end up getting far less than $125."

While upwards of $500 million was set aside by Equifax to reimburse consumers and pay costs associated with the massive, multi-district litigation on behalf of 147 million Americans, only $31 million was earmarked in the settlement for these credit monitoring-alternative payments.

According to the settlement agreement, which has only received preliminary vetting and must obtain final approval from a federal judge as early as December, if the monitoring-alternative claims exceed the $31 million cap, then the funds will begin to be distributed proportionately.

The deadline for filings claims is January 22, 2020, but individual claims won't be processed until the court signs off on the finalized agreement.

The negotiated settlement, including associated fines and penalties, is the most costly agreement stemming from a data breach to date.

While the surge in interest in this part of the compensation program may have surpassed what the settlement anticipated, Equifax could suffer more devastating losses if impacted consumers opt for the free credit monitoring instead of the cash payout.

Every million consumers who sign up for the credit monitoring protections costs Equifax around $16 million. If every consumer eligible signs up for the monitoring, the company could be on the hook for more than $2 billion. There is no cap on the amount of people able to sign up for credit monitoring, although consumers cannot elect to receive both monitoring and the $125 payment.

There are other ways for consumers who want cash reimbursement to receive it. Losses up to $20,000 can be claimed for harm suffered by the theft of personal data, including identity theft and fraud that is "fairly traceable" to the 2017 breach.

It may be easy for consumers to claim small portions of this money, as the settlement provides for reimbursement of time spent dealing with the breach, including time spent correcting fraudulent purchases or taking precautionary measures to prevent identity theft.

The company will pay consumers for these billable hours at a rate of $25 an hour for up to 20 hours. The first 10 hours simply require self-certification of how the time was spent; the next 10 hours require additional documentation to submit a claim.