Security & Fraud

Fed Chair Urges Banks To Revisit Controls After Equifax Breach

Fed vice chairman pick?

After the Equifax data breach, the Federal Reserve wants to ensure that the banks it supervises take appropriate actions if fraudulent transactions are found or if data is contaminated.

According to Bloomberg, Chair Janet Yellen said that the Reserve is working with the banks to help them guard against fraudulent transactions and other potential harm stemming from the “very serious” Equifax data breach, which exposed the personal data of about 143 million consumers.

“It points to the importance of strong cybersecurity controls and attention to cybersecurity risks, which we do see as one of the most significant risks to the financial sector,” Yellen said.

While the Fed doesn’t oversee credit reporting companies like Equifax, it does monitor the activity of banks that use the information they provide to determine whether consumers should get loans. Yellen went on to say that consumers need to monitor their credit reports and personal finances to ensure they haven’t been impacted by the breach.

The information exposed in the breach includes names, Social Security numbers, birthdates, addresses and, in some instances, drivers’ license numbers. Equifax also reported that 209,000 U.S. consumer accounts were accessed by the hackers, as well as certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers. Unauthorized access to limited personal information for certain U.K. and Canadian residents was also discovered.

In addition, Reuters reported that the House Financial Services Committee is seeking information about certain Equifax options trades made weeks before the company disclosed the breach. Equifax options drew an unusually large trade less than three weeks before Sept. 7, which is when the company revealed the data leak.

On August 21, 2,500 put contracts betting on Equifax shares dipping below $135 by Sept. 15 traded for a total price of about $181,000. By end of trading on Sept. 8, these puts were worth about $2.6 million.

Sources said that a lawyer for the committee has reached out to traders, looking for an explanation for the spike in options trading.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.