Senators Rip Credit-Reporting Model in Wake of Equifax -- 2nd Update
By AnnaMaria Andriotis, Michael Rapoport and Christina Rexrode
Senators questioning Equifax Inc.'s former chief Wednesday attacked the business model of the credit-reporting industry, asking why consumers shouldn't have power over the data that these companies collect on them.
The hearing before the Senate Banking Committee was as much about the control consumers have over their personal data as it was about the Equifax hack, which has affected potentially 145.5 million Americans. Senators questioning former Equifax Chief Executive Richard Smith, who is appearing before a series of congressional panels this week, asked whether a large overhaul is needed for both private sector and government activities.
"There is massive data collection being undertaken in this country," said Banking Committee Chairman Sen. Michael Crapo (R., Idaho) during Wednesday's hearing before his panel. Congress, he said, needs to address broader issues about "the collection and use and protection of personally identifiable information that is being collected by the government, by the private sector and others."
In terms of the big credit-reporting companies, which along with Equifax include Experian PLC and TransUnion, senators repeatedly raised a key point: Consumers don't choose to share their data with these firms nor do they receive compensation for it, even though companies like Equifax profit by gathering it and selling it to lenders and other companies.
"You have my information, you don't pay me for it, you don't have my permission," said Sen. John Kennedy (R., La.). "You can't run your business without me. My data is the product you sell."
But much of consumers' financial lives, including whether they can get approved for loans or rent an apartment, depends on the data these companies have.
Although Equifax has been the focus of attention since disclosing its massive breach in early September, the credit-reporting industry has feared it will lead to more regulatory oversight and changes to the underpinnings of the consumer-finance economy.
Several senators called for just that. Sen. Sherrod Brown (D., Ohio) noted that consumers have more control over their personal medical data, and questioned why similar standards shouldn't be applied to financial information. He asked Mr. Smith if consumers should be allowed to ask Equifax to delete their data. Mr. Smith replied that locking their credit was a better option.