Following Exposure of Massive Data Breach by Equifax Company Awarded IRS Contract

What's the story?

Consumer credit reporting agency Equifax has been awarded a $7.25 million contract by the IRS to "verify taxpayer identity" and "assist in ongoing identity verification and validations". The contract was awarded to Equifax without any other competing bids after the company was exposed for a massive data breach that compromised the private, identity data of over 145 million consumers, reports Politico.

The IRS maintains that there is no other company that is qualified to provide the essential service.

Why does it matter?

Subsequent to the data breach being publicized, CEO Richard Smith resigned, though he will still collect an estimated $90 million in pay and stock vesting. He was grilled by lawmakers of both parties at a House Energy and Commerce Committee meeting Tuesday, and lawmakers on both sides of the aisle have expressed outrage at news of the IRS contract.

Senate Finance Chairman Orrin Hatch (R-UT) called the contract award "irresponsible" to Politico:

"In the wake of one of the most massive data breaches in a decade, it’s irresponsible for the IRS to turn over millions in taxpayer dollars to a company that has yet to offer a succinct answer on how at least 145 million Americans had personally identifiable information exposed."

Smith will appear before the Senate Banking Committee today.

In early September Equifax revealed that six weeks previous they experienced a cyberattack resulting in the massive data breach. As many as 145.5 million consumers' birth dates, addresses, driver's license numbers and Social Security numbers were potentially compromised, along with 209,000 consumers' credit card numbers.

Before the company notified the public, three Equifax managers sold off company stock totalling $1.8 million. The company maintains the executives were unaware of the breach before they sold the stock, but the sales are being investigated by the Securities and Exchange Commission in the midst of the contract award.

Additionally, there a class-action lawsuit has been filed against the company, alleging they did not protect consumers adequately.

Consumers are urged to monitor their credit reports and credit card statements closely, but Equifax's efforts to help have been universally panned.

Further serious questions about the company's handling of breach were raised based on Smith's committee testimony.

— Asha Sanaker

(Photo credit: Public Domain Pictures / Creative Commons )

Related Reading

*Equifax And Wells Fargo Apologize To Congress; Lawmakers Not Buying It — NPR

*Equifax Breach Caused by Lone Employee’s Error, Former C.E.O. Says — New York Times

*Why the Equifax breach is very possibly the worst leak of personal info ever — Ars Technica

*How To Protect Yourself From That Massive Equifax Data Breach — Wired

*Equifax Faces Multibillion-Dollar Lawsuit Over Hack — Bloomberg

*Equifax says 3 top execs 'had no knowledge' of a massive security breach when they sold nearly $2 million in shares after the hack was discovered — Business Insider