Equifax Data Breach Case Study

University:
Eastern Kentucky University
Course:
PHI 360 | Ethical Theory and Practice
Academic year:

2021
Views:

338

Pages:

3
Author:

Edgar Rowe

1 EQUIFAX DATA BREACH CASE STUDY Student Author Philosophy: Ethics and Social Responsibility November 16, 2021 2 Equifax suffered a massive data breach, exposing approximately 143 million individuals’ personal information. The data breach itself shows the lack of security oversight maintained by the company, but how it handled itself after discovering the breach is a bad example of proper business ethics. After discovering the data breach and before the news was made public, several Equifax executives sold off company stock in the range of $2 million (OpenStax, 2018). This was not only a breach of ethical conduct but was also a legal violation of insider trading rules. These executives showed a lack of even the bare minimum of ethical conduct when this legal compliance was broken. Their actions further eroded the trust the public had in the company, it’s hard to trust a company that took financial advantage of a situation that was harmful to their customers. After these breaches of trust, the CEO retired just a few days before he was scheduled to testify to Congress. While this was legally compliant, it was certainly ethically questionable. After such a massive breach, the minimum the CEO should have done was testify, take responsibility, and hopefully alleviate some of the public's fears. Had the CEO taken responsibility for the breach, condoned the activities of his executive, and layed out a reasonable course of action, he would have shown his stakeholders that he is an ethical leader with strong personal integrity. The security breach, by itself, was bound to have a negative effect on the company's reputation. But the combination of insider trading and complete lack of responsibility taken by 3 leadership would likely lead to a lasting reputation hit and a loss of market share. It's hard to trust a company whose executives have no integrity or responsibility for their actions. It’s easy to surmise that many current and future clients will move their business to competitors who, hopefully, will at least take their responsibility to their clients seriously. The initial offer of $125 or free credit monitoring sounded good, but the cash payout is capped at $31 million (Henderson, 2019). This means if more than 240,000 people sign up for the cash payout, the amount they receive will start to decrease all the way down to approx .21 cents if all 143 million affected request it. The settlement team also sent out questionable-looking class-action email notices, which was done in the hope of keeping responses extremely low, around 3% (Warzel, 2019). If Equifax was serious in their offer and desire to make things right, they should have provided a much larger portion of the $300 to $425 million settlement for these cash settlements. Not only this, but their settlement team should have made a proper effort to ensure the victims received their notices and made the process of making a claim simple. The Equifax data breach was a massive blow to their customer’s privacy and the company’s response showed little ethical consideration or personal integrity on the part of the executive team. Even now, with new leadership, Equifax is doing the bare minimum to win the trust back from their stakeholders.

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