AuthorTopic: Equifax: Eye of the Financial Hurricane  (Read 1238 times)

Offline RE

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Equifax: Eye of the Financial Hurricane
« on: September 24, 2017, 02:35:26 AM »


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Published on The Doomstead Diner September 24, 2017






Discuss this articcle at the Market Flambe Table inside the Diner



I'm taking a break from the Hurricane articles at last, despite the fact over the course of the week Maria did a Strafing Run through the SAME islands that Irma took out a couple of weeks ago, and in addition made a direct hit on Puerto Rico this time as a Cat 4, basically wiping out San Juan.  Not that it was ever possible, but there is NO WAY PR will ever be able to pay off the debt they have now.  To rebuild, they'll need NEW debt!  Meanwhile, Puerto Ricans are going to be heading for the shores of the continental FSoA by the boatload.  The population there was already shrinking precipitously.  There's not going to be anyone left there to Tax!



Anyhow, for This Week in Doom Sunday Brunch article I'm going to talk about another type of Storm, the Financial Storm that has emerged from the Equifax Data Breach.



For those of you who don't know, Equifax is one of 3 Credit firms which collect data to pass on to banks, insurance companies, landlords, jobs etc with your Credit Score, which determines whether you will get that Car Loan, or Mortgage, Apartment or Job, etc.  Essentially, they control your life under our current monetary system.  If you don't get the Thumbs Up from the Credit Bureaus, you can't buy in to the industrial economy in any real way.  Not that this is necessarily a bad thing, but for most people who aspire to a McMansion, a Car and a good paying job, if your credit is rat-fucked it's a very distressing problem.



It's bad enough when you rat-fuck your credit yourself by going in too deep on the Credit Cards, or buying Carz and Trux and McMansions on loans you can't afford, but it's orders of magnitude WORSE if you didn't even make the charges yourself, which is what can happen when some Hacker gets hold of all the information that Equifax stores in their database.  This includes not just your SS#, bank account numers, credit card numbers and payment histories on everything.  It's your financial life history, in a digital nutshell.



The data breach of Equifax took out 143M Amerikan Konsumers Financial Information and put it in the hands of whoever it was that pulled off this hack.  When you consider the fact that there are only around 350M Amerikans all totalled up and lots of them are kids or illegal aliens without SS#s, that's basically everyone in the FSoA who has a Bank Account of some type.  The breach isn't just a transient thing either, it is for LIFE.  Unless you are on top of it all the time watching for unauthorized Credit applications under your Identity, any time for the rest of your life somebody could use this information to set up an account which YOU would be held responsible for.  Defending yourself against such attacks is quite difficult, expensive and time consuming.  Not to mention how it can fuck up your life, preventing you from getting that covetted high-paying, hi-tech job you paid big bucks training for in some Kollege somewhere.



Various "solutions" to this problem have been put forward on the net by various financial websites, the main one being to FREEZE your credit reports, thus not allowing anyone to check the credit, which of course means you can't get any more credit, even yourself!  It wouldn't be a bad thing if EVERYONE froze their credit in the grand scheme of things, that would surely bring the Monetary System to its knees in short order.  This however is unlikely to happen, particularly since Equifax, Experian & Transunion (the other two corporations in this bizness) make it as hard as they can for you to do this.



The lawsuits are already beginning to roll in.  This was pretty clearly a case of negligence and incompetence in the upper management of Equifax.  From Wolf Richter:




Carson Block, the infamous short-seller who among other things peeled back some of the layers covering up Valeant’s murky business schemes and crushed its shares and made a ton of money in the process, missed out on the Equifax disaster. Not having divined what would happen, his firm Muddy Waters failed short Equifax shares before they collapsed 35% in six trading days.



But he didn’t miss out on the hack: He was one of the 143 million Americans whose data, including Social Security numbers, got stolen in the Equifax hack. And on Friday, he sued Equifax.



The lawsuit, reported by the Financial Times on Sunday, accuses Equifax of negligence in its failure to protect his personal identifying information from criminals, and of not disclosing the hack in a timely manner. He is seeking damages of at least $500,000 for the “stress, nuisance and annoyance” of having to deal with the consequences of the hack.



The suit notes that Equifax’s business revolves around being a “secure storehouse” for data and providing a clear financial profile of consumers that lenders and other businesses can rely on.



At a minimum, Equifax should have but didn’t patch a vulnerability in Apache Struts, an open-source framework for developing web applications in Java. The Apache Foundation disseminated a patch on March 6 but Equifax didn’t implement the update. ArsTechnica explains the omission:



Three days later, the bug was already under mass attack by hackers who were exploiting the flaw to install rogue applications on Web servers. Five days after that, the exploits showed few signs of letting up.



The hack occurred after mid-May. On Friday, Equifax said that it had finally patched the vulnerability on July 30, nearly five months after the update had become available, and a day after it had figured out that it had been hacked. This must have been one of the most glorious oh-shit moments in corporate history.



Block’s lawsuit names 11 senior executives at Equifax, including CEO Richard Smith. Two of the named people, chief information security officer Susan Mauldin and chief information officer David Webb, were sacked on Friday “effective immediately.”




Particularly imcompetent here seems to be the CIS, aka "Chief Security Officer" Susan Mauldin.  Her degree is in Music.  WTF does Music have to do with Security for a Financial firm with a huge computer database?  I would think you would want to hire an experienced Hacker for this spot.  Somebody with a track record of being able to find flaws in a system and exploit them.  But no, they hire a fucking flute player for this position!



Where the Negligence comes in here is they actually KNEW about this flaw months before the hack, and did nothing to patch the hole.  I confess to being somewhat negligent on my own computers with not patching holes and not keeping my anti-virus software updated, but all I have on my computer is my own shit.  I am not storing the personal financial records of 143M people!



So anyhow, the fact of the matter is that at this point you have to figure your credit information has been compromised and dispersed to various nefarious people who will attempt to use this information to get some FREE MONEY from the banks.  Free for them, you get the bills later.  But with 143M people to choose from, who will these crooks pick as victims?  They're going to pick the people with High Credit Scores and High Assets they could use as collateral for big loans.  They're NOT going to pick people with Low Credit Scores and Low Assets.  If you are a stickup artist and there are 2 potential Marks on the street at 2AM, one a homeless person sleeping in a refrigerator box and the other a wasted Wall Street trader in an Armani suit and Italian Leather shoes leaving one of the Watering Holes in SoHo, which one are you gonna hit?  You're not gonna get much from the Homeless Guy, but you could strike the JACKPOT with the shit-faced Wall Street Trader!  Maybe he has a few Ben Franklins left in the wallet after the night of debauchery!  Maybe he has a Diamond Ring and a Rolex!  The Italian Leather Shoes might even fit you!



No different for the Digital Rip-Off Artists here, and even easier to pick out the best people to steal from, since you have ALL their financial information!



Which is why I am not in the least bit worried about Identity Theft here or my Credit Info being hacked from Equifax.  WTF is going to want to steal my identity?  My Credit Score is so low it is measured in the Negative Imaginary Numbers.  The reason it is so low is not because I don't pay my bills, it's because I buy nothing on Credit.  I haven't used a Credit Card in 25 years.  I buy only Used Carz for CASH.  I don't buy places to live, I rent them as I need them, where I need them.  Forget opening up a credit account you could steal from if you have my information, *I* can't open up a credit account with my own information! lol.  I don't think they would even give me a LIAR loan for a McMansion!  So for the most part, this whole Equifax scandal simply amuses me.  Other than assisting in collapsing the monetary system, there is little it will do to affect me personally.



All of which should teach you a lesson.  Your best protection from Theft is to not have anything worth stealing.  You know who complains the most about Taxation as Stealing?  RICH PEOPLE!  People who make $250K and more, who ALSO will be the priumary victims of Identity Theft.  I pay just about NOTHING in taxes, and even if they raised my tax rate and that of others like me with my Poverty Level Income to 100%, it wouldn't raise Jack Shit in money to pay off the National Debt.  To get that kind of scratch, you need to take it from the people who actually HAVE it. As Willie Sutton said when asked why he Robbed Banks, his response was:



http://www.azquotes.com/picture-quotes/quote-i-rob-banks-because-that-s-where-the-money-is-willie-sutton-58-8-0875.jpg



So I am 100% IN FAVOR of Taxing the Living Shit out of the Rich in this spin down.  95% Tax rate on all income $200K and up.  No personal Assets worth over $10M, confiscation of all Private Jets and Big Ass Yachts. No ownership of multiple homes. Since there won't be a market for these items anymore, you won't be able to sell them off for CASH, but you could use the Yachts for Homeless Shelters.  You might think that Personal Asset number of $10M is pretty high (I do), but I figured it on a 1% ROI which would give an annual return in Retirement of $100K.  I figure with the max income of $200K, this should be plenty to live on in retirement.  I don't want rich fucks making $200K and up to have to suffer too much.  I am a compassionate guy. lol.



No matter how you look at it though or how you try to do the wealth redistribution, the whole deal is highly deflationary, it has to be because there is just going to be much less STUFF left to buy, for any kind of money at all.  The issue for the society at hand is to figure out how to most equitably distribute the resources that are left, and capitalism sure as hell won't do it.  It didn't do a good job of distributing resources when they were plentiful, WTF would you think it would do a better job when they are in deficit?



Unless you find a more equitable solution to the problem of diminishing resources and continue to see "reverse wealth redistribution" where money is stolen from the Poor and given to the Rich, you will eventually see full on Class Warfare here, and I'm not talking about the kind of warfare where money is simply pilfered from bank accounts, I'm talking about the kind that occurred during the French  & Bolshevik Revolutions, the kind where the Poor People finally get thoroughly pissed of enugh to bring on the Torches, Pitchforks and Nooses.



In Puerto Rico today, as we speak, we see a vivid demonstration of just how fast an industrial based economy can slide off the cliff, sending millions of people into poverty who were formerly at least "lower middle class".  All it really takes is for the electrical grid to go down, and that can occur for numerous reasons besides a Hurricane.  Even without Maria, this was destined to occur, Puerto Rico simply could not afford to maintain that infrastructure or pay for the energy it used.  This did speed up the process of FAST COLLAPSE by quite a bit though in that location.



For your own location, it is difficult to say how long it might be before SHTF Day comes to your Neighborhood.  If you are deep in the Heart of Darkness in New York Shity, if no major storms come on a STRAFING RUN to take out the infrastructure you depend on, BAU might lat another 10 or even 20 years.  But it won't last forever, and when it does collapse, it won't be slow.  It will be like Puerto Rico, and happen in an incredibly short period of time by all measures.  John Michael Greer is very wrong with his hypothesis of "Slow Catabolic Collapse".  That is not how Collapse works at all.  When the lynchpins that underpin the society are pulled out, it all goes down very fast.



If Collapse has not yet arrived at your doorstep, you still have time to PREP UP!  No, you can't make all provisions for all things that might occur to you, but you can at least not be an IDIOT!  Potable Water, Food, Shelter first.  If you don't actually have the preps before the event, you are SOL from the get go.  Don't be one of the IDIOTS trying to buy batteries and bottled water at Walmart the day before the Hurricane is due to arrive.  Equifax, Harvey, Maria… they are all just Canaries in the Coal Mine.  If you do not think this kind of FAST COLLAPSE can happen to you, I suggest you think again.



https://www.timeshighereducation.com/sites/default/files/Pictures/web/i/s/r/feature_2.jpg


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Offline RE

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Equifax Discloses its Coming Nightmares
« Reply #1 on: November 13, 2017, 12:59:03 AM »
https://wolfstreet.com/2017/11/10/what-equifax-just-said-about-its-legal-nightmare/

Equifax Discloses its Coming Nightmares
by Wolf Richter • Nov 10, 2017 • 42 Comments   

“It is not possible to estimate the amount of loss or range of possible loss.”


Equifax reported that revenue ticked up 4% year-over-year in the third quarter to a less-than expected $835 million and that net income plunged 27% to $96 million due to the initial costs related to the most damaging consumer data hack in US history. But it also disclosed in the fine print of its SEC filing just what a legal and financial nightmare it is getting into over what it calls the “cybersecurity incident.”

The “cybersecurity incident” occurred in mid-May, was discovered in July, and was first disclosed on September 7. Its dimensions have since expanded. It compromised the personal-data crown jewels, including Social Security numbers, of 145.5 million US consumers, credit card numbers of  209,000 US and Canadian consumers, “certain dispute documents with personal identifying information” for 182,000 US consumers, personal information of 8,000 Canadian consumers, and personal information of at least 690,000 UK consumers.

The initial expenses related to the “cybersecurity incident” were an undramatic $27.3 million. But that’s just the timid beginning.

Then the costs related to the “free credit file monitoring and identity theft protection” will likely range between $56 million and $110 million. And that too is just the beginning.
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The biggie? Litigation, Claims, and Government Investigations.

“Over 240” class action lawsuits by consumers against Equifax in US federal and state courts and in Canadian courts. The plaintiffs “generally … assert a variety of common law and statutory claims seeking monetary damages, injunctive relief, and other related relief.”

Undisclosed number of class action lawsuits by financial institutions against against Equifax. They “allege their businesses have been placed at risk due to the cybersecurity incident and generally assert various common law claims such as claims for negligence and breach of contract, as well as, in some cases, statutory claims.” These suits seek compensatory damages and “other related relief.”

Undisclosed number of “putative class action lawsuits” by shareholders against Equifx and “certain” of its current and former officers and directors. They allege “violations of the federal securities laws in connection with statements regarding our cybersecurity systems and controls” and are seeking “unspecified monetary damages, costs and attorneys’ fees.”

Undisclosed number of “other lawsuits and claims allegedly arising out of the cybersecurity incident,” presumably including the $500,000-lawsuit filed by short seller Carson Block.
Government entities are getting restless.

US federal, state, and city government agencies, and governmental agencies and officials in the Canada and the UK are investigating among other things, how the cybersecurity incident “occurred, the consequences thereof, and our response thereto.” They’re “seeking information and/or documents, including through Civil Investigative Demands.” And they “may seek to impose injunctive relief, consent decrees, or other civil or criminal penalties….”
The restless entities in the US include:

    The 50 state Attorneys General offices and the District of Columbia and Puerto Rico. The Attorney General of Massachusetts has already filed a civil enforcement action.
    The City of San Francisco and the Chicago City Council have filed lawsuits “alleging violations of state laws and local ordinances governing protection of personal data, consumer fraud, and breach notice requirements and business practices.”
    The Federal Trade Commission (FTC).
    The Consumer Finance Protection Bureau (CFPB)
    The SEC and the US Attorney’s Office for the Northern District of Georgia have sent subpoenas to Equifax “regarding trading activities by certain of our employees in relation to the cybersecurity incident.”
    The New York Department of Financial Services
    The New York Department of State – Division of Consumer Protection
    “Other US state bank regulators”
    The Financial Industry Regulatory Authority (FINRA)
    “Certain Congressional committees” of the Senate and House of Representatives.

Outside the US:

    The UK’s Financial Conduct Authority (FCA). Its Enforcement Division has opened an investigation into Equifax’s UK subsidiary.
    The UK’s Information Commissioner’s Office
    Canada’s Office of the Privacy Commissioner.

And more hounding may come:

    Additional lawsuits and claims related to the cybersecurity incident may be asserted by or on behalf of consumers, customers, shareholders or others seeking damages or other related relief and additional inquiries from governmental agencies may be received or investigations by governmental agencies commenced.

Equifax doesn’t know how much it’ll cost.

But it could be big — and “have an adverse effect on how we operate our business or our results of operations.”

    It is not possible to estimate the amount of loss or range of possible loss, if any, that might result from adverse judgments, settlements, penalties or other resolution of the above described proceedings and investigations based on the early stage of these proceedings and investigations, that alleged damages have not been specified, the uncertainty as to the certification of a class or classes and the size of any certified class, as applicable, and the lack of resolution on significant factual and legal issues.

Unknown “Future Costs” associated with the “cybersecurity incident” beyond the judgements, penalties, fines, and the like, include:

    “Significant” legal and other professional services expenses.
    Increased expenses and capital investments for IT and security.
    Increased expenses for insurance, finance, compliance activities, and to meet increased legal and regulatory requirements.
    Increased costs to provide free services to consumers including “increased customer support costs.”

There will be “other risk factors,” in addition the legal risks:

“Our remediation and security and IT enhancement efforts will be costly and may not be effective,” it said. Plus, the fiasco “has had a negative impact on our reputation” [no kidding!], and may have “a long-term effect on our relationships with our customers, our revenue and our business.”

Worst of all, this unwanted attention by government agencies and the courts could hamper its business of collecting and monetizing consumers’ personal data (remember, the consumer is the product):

    The governmental agencies investigating the cybersecurity incident may seek to impose injunctive relief, consent decrees, or other civil or criminal penalties, which could, among other things, impact our ability to collect and use consumer information, materially increase our data security costs and/or otherwise require us to alter how we operate our business.

Where there’s a crisis, there’s opportunity – for fraudsters. Here are some of the Equifax scams now underway – and how to protect yourself. Read…  Beware – the Equifax Scams Are Coming
« Last Edit: November 13, 2017, 01:53:10 AM by RE »
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