In a world where the internet is ubiquitous, no online service is completely safe from hackers. Credit reporting company Equifax Inc. (NYSE:EFX), said last week that “its systems were struck by a cyberattack.” Up to 143 million consumers in the U.S. may have been affected. Some U.K. and Canadian residents were also compromised in the breach. “Intruders accessed names, Social Security numbers, birth dates, addresses and driver’s license numbers.” Furthermore, the “credit card numbers for about 209,000 consumers were also accessed.” The hackers were able to use a vulnerability on a U.S. website application to gain access to certain files from mid-May through July of 2017. “The intruders also accessed dispute documents with personal identifying information for about 182,000 consumers.” Though the attack was stated to have begun in mid-May, the breach was not discovered until July 29.
Since exposing one of the largest hacks of the year, the compromised company is now facing dozens of federal lawsuits. More than 23 lawsuits have been filed so far. In one case Equifax is accused of misleading shareholders about its ability to protect consumer data. The agency knew about the hack more than a month before the truth came out. The lawsuit claims the company inflated financial statements to bring up the share price, before being exposed. According to techcrunch, another lawsuit was filed in Portland, Oregon. “Customers say that Equifax has been negligent when it comes to information security. Two firms are leading the class action lawsuit, Olsen Daines PC and Geragos & Geragos. The plaintiffs are Oregon residents whose information was stored by the agency and hacked by an unauthorized third party. They’re asking for billions in damages.” If successful this could cause major financial difficulty for Equifax as the company only makes about $600 million in earnings each year.
After Equifax announced the security breach about $3 billion was wiped away from the company’s market cap as its shares dropped as much as 17% in the immediate trading session. On Monday key law makers demanded a detailed account of the company’s security systems. They are concerned that customer’s sensitive information was not properly protected.
The unfortunate thing is that consumers who never signed up for Equifax services may still be affected by the hack. If you feel that you may be a victim of this security breach there are a few things you can do, such as place an initial 90 day fraud alert on your file. This is free and will require lenders to contact you if someone (including yourself) tries to apply for any kind of new credit. Government info. The good news is you only have to do this with one credit bureau in order for the alert to be placed on all three.
You may also check your file at annualcreditreport.com and verify its accuracy, and dispute any information if you think it is incorrect. This is a government-mandated website, signed into law (FACTA) in 2003 by George W. Bush, which allows you to pull each report once every 12 months.
According to technical analysis company, Recognia, Equifiax stock (EFX) shows 17 bearish technical indicators and only 5 bullish ones. There is no telling how much damage this will cost the company so I would not advise buying EFX at this time. The P/E ratio of 24.5 times also suggests that the valuation of the stock is not cheap. It is likely the stock will go lower from here before it can recover. Investors may want to wait for the lawsuits to subside and hear better earnings next quarter before considering buying this stock.