The Equifax Data Breach: Here’s What Your Plan Participants Need to Do
Almost two years ago, in September of 2017, Equifax, experienced one of the hugest and damaging personal data breaches in the history. Personal information of about 147 million people was exposed. Chances are your employees' private information was exposed too.
After an investigation and scrutiny, the company has agreed to a settlement with the Federal Trade Commission. In accordance with the agreement, Equifax will pay $425 million out of the $700 million settlement to people affected by the breach.
What Does It Mean to Your Retirement Plan Participants?
Firstly, have them check if they were affected by the Equifax data breach by sending them to this webpage. Those who were impacted by the breach will become eligible for the following three benefits:
A cash payment of $125 (if already have credit monitoring and will have it at least for the next six months) OR free credit monitoring and identity theft protections service. The latter includes $1,000,000 of identity theft insurance, at least four years of free monitoring of credit report from all three agencies, and up to additional 6 years of free monitoring from Equifax.
Cash payments for time spent time from the breach and lost money because of the breach. Spent time includes actual time your participants had to spend on placing credit freezes, buying identity protection from third-parties, or hiring a professional to help with all that. Equifax will pay $25 per hour up to 20 hours for time spent. They may need to provide additional documentation of time spent that exceeded 10 hours. Total cash payment is capped $20,000 per person.
Free help recovering from Identity Theft. Your plan participants can get at least seven years of free identity restoration services. For example, if they discover misuse of the personal data because of the data breach, they can call the settlement administrator at 1-833-759-2982 to access these services.
What Do Your Employees Need to Do Next?
Your employees must file a claim before January 22, 2020. Have them to go to File a Claim page, click on the green button, and to fill out the information.
In next three sections a employee will be asked whether they want a cash payment of $125 or a free credit monitoring, if they spent time trying to recover from identity theft caused by the data breach, and if they lost or spent money trying to recover from the fraud. After answering all the questions have them check the claim summary and submit it.
The claim will then be reviewed and only starting January 23, 2020 they will hear back from the settlement administrator.
Should They Choose Cash Payment or Free Credit Monitoring?
Cash is cash they would think, and intuitively opt in for the $125 cash payment. However, notify your employees not to be so optimistic and naive. Here’s why. Only $31 million was allotted to reimburse victims of the data breach and according to the Federal Trade Commission Equifax Data Breach page “The public response to the settlement has been overwhelming. Millions of people have visited this site in just the first week. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.” That means that most likely your employees will get pennies.
I highly recommend opting in for the free credit monitoring. With the Free Credit Monitoring option, you’re guarantee at least four years of FREE credit monitoring at all three credit bureaus. That’s already a value of hundreds of dollars right there. Moreover, after four years one will get free credit monitoring from Equifax for additional six years which is another hundreds of dollars in value, not mentioning peace of mind that you get knowing (or at least hoping) that your personal information this time is safe.
So the choice is theirs but as a retirement plan sponsors and their employer you can encourage your employees not to buy into this cash bait and opt in for the Free Credit monitoring instead. By doing so, whether they realize that or not, you increase their chances of retiring on time and secured and protect their personal data at the same time.