FTC misled consumers about Equifax settlement, Warren says
WASHINGTON — Sen. Elizabeth Warren has accused the Federal Trade Commission of “misleading public descriptions” of consumer benefits from Equifax's settlement with state and federal authorities over the credit bureau's 2017 data breach.
Equifax agreed to pay up to $700 million in the settlement announced last month. But Warren is questioning a claim by the FTC, when the agency announced the deal, that consumers affected by the breach can sign up either for 10 years of free credit monitoring or to receive a cash payment $125 for monitoring they already use.
The Massachusetts Democrat is calling on the FTC's watchdog to investigate the claim.
“The FTC has the authority to investigate and protect the public from unfair or deceptive acts or practices, including deceptive advertising,” Warren wrote in a letter to the FTC’s inspector general Wednesday. “Unfortunately, it appears as though the agency itself may have misled the American public about the terms of the Equifax settlement and their ability to obtain the full reimbursement to which they are entitled.”
The settlement required Equifax to allot funds to pay for consumers' credit monitoring as well as additional payments to compensate consumers for their losses.
But Warren said the total amount Equifax is required to set aside is not sufficient to satisfy what the FTC promised would be available for consumers. She said the settlement provides only $31 million for "alternative reimbursement compensation" and that payments to consumers would be reduced on a pro rata basis if valid claims for compensation exceeded the amount allotted.
She said the FTC “did not inform consumers that the cash payment was subject to — and in fact, was very likely to be — severely reduced.”
“As of today, the infographic on the FTC website now does not even mention the possibility of consumers receiving the $125 payment,” Warren wrote. She said the $31 million would pay less than 1% of the consumers affected by the breach.
Warren is asking the FTC’s inspector general if the agency had an estimate of the number of consumers who would select alternative reimbursement and why it didn’t notify consumers that the $125 cash payments could be reduced.
She is also asking which specific individuals and offices at the FTC were responsible for the statements about compensation to consumers and what communications the agency had with Equifax and other regulators before the announcement of the settlement.
The FTC declined to comment.