Equifax Inc. (NYSE:EFX) last week announced that it fell victim to a data breach which saw lots of personal information compromised, including Social Security numbers, addresses, birth dates, and other vital information that could be used to commit identify theft. As many as 143 million Americans were impacted, as well as individuals from Canada and the United Kingdom.
There are two big problems with this that investors shouldn’t ignore.
First, the credit reporting agency’s business model involves storing information securely and ensuring it does not get in the wrong hands. This would be similar to your bank not adequately securing your bank account information and hackers being able to obtain it. You probably wouldn’t use that bank ever again. It is one thing if a retailer gets breached and credit card numbers are compromised, it’s quite another when your vital information used to uniquely identify you to a bank or other financial institution is compromised.
Second, the company was not even upfront about the hack and although it happened in July, people are just now finding out about this. People’s information could long have been defrauded and made victims because of this leak and by not allowing individuals to be made aware of it immediately prevents them from taking necessary precautions to protect themselves.
These are not issues investors to take lightly, as it severely puts into question Equifax’s ethics and its core competencies. The stock has dropped 13% in value in the past week as investors found out about the news. However, I believe there is more to come and this is a stock you should stay far away from.
