Security & Fraud

Senators Dissatisfied With Equifax’s $7M Deal With The IRS

Globalization Drives Cybercrime Threat

Senators Elizabeth Warren and Ben Sasse have some questions for the Internal Revenue Service (IRS) when it comes to Equifax.

Less than a month after it was revealed that the credit reporting agency had been hacked and lost nearly the entire adult population’s personal credit information to cybercriminals, the Internal Revenue Service decided it was probably all right to award Equifax a $7.25 million contract to help verify taxpayers’ identities.

Warren of Massachusetts and Sasse of Nebraska do not think this was a great idea.

“Rewarding a company that has exposed tens of millions of Americans’ personal data to criminals with millions of dollars in taxpayer funds to verify and validate personal tax-related data is a confusing decision,” they wrote in a letter to IRS Commissioner John Koskinen on Wednesday, Oct. 4, asking him to explain the reasons for the award and whether the Atlanta-based company had promised cybersecurity upgrades.

“The catastrophic breach at Equifax puts a significant burden on the company to earn any government contract, and on the IRS to explain fully why such a contract was awarded,” they added. “If the IRS cannot sufficiently do so, this contract should be rescinded.”

And while they are the only two that wrote a letter, they are not the only two concerned. During a hearing with Senators on the hill this week, former Equifax CEO Richard Smith fielded questions about the contract. The House Ways and Means Committee members raised the IRS deal with Equifax in a separate hearing, as well.

IRS officials noted that said contract needed to maintain an electronic authentication service that might have lapsed during the company’s protest over the IRS giving a longer-term contract to one of its competitors. Sen. Heidi Heitkamp pointed out that perhaps given the extent of Equifax’s recent screw-up, the stand-up thing might be to pass on the contract without protest.

“Just say, ‘We’re getting our house in order, we understand we have a ways to walk back our reputation, we’re going to walk back our protest on the loss of the contract,’” she urged Smith.

Warren noted that Equifax has already done a fair amount of damage to American business and yet seems to be escaping without any real harm to itself.

“Because of this breach, consumers will spend the rest of their lives worrying about identity theft, small banks and credit unions will have to pay to issue new credit cards, businesses will lose money to thieves, but Equifax will be just fine,” Warren said during the hearing.

With revenue growth from fraud-protection services sold in the aftermath, she noted, “it could actually come out ahead.”

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