Last week, the FTC announced that the 147 million consumers whose data was leaked as a result of the Equifax hack would be able to obtain $125 or more as part of a settlement. But after millions of consumers took them up on the offer, the agency is now backing away from the promise.
As part of the original settlement, the FTC stated that consumers would be able to net either a $125 cash payout or ten years of free credit reporting. Users were told they’d also be able to recoup up to $20,000 in compensation if they were able to prove that the leaked data (which included social security numbers) was used to steal their identity.
That was then, this is now.
A new FTC statement and blog post proclaim that because of “overwhelming” and “unexpected” public interest in the offer, users may not get the $125 they were originally promised. The agency is now strongly urging users to take the free credit monitoring instead.
“The pot of money that pays for that part of the settlement is $31 million,” the FTC said. “A large number of claims for cash instead of credit monitoring means only one thing: each person who takes the money option will wind up only getting a small amount of money. Nowhere near the $125 they could have gotten if there hadn’t been such an enormous number of claims filed.”
In short, the $125 originally promised by the agency could wind up being as little as $5, if you wind up getting anything at all.
The FTC did not respond to a request for comment as to whether this issue reflects a flaw with the settlement as designed, or why the FTC found the surge of interest “unexpected.”
In its blog post, the FTC works overtime to convince the public that free credit reporting (from an industry already shown to do a poor job protecting private consumer data) is better than cold, hard cash.
“Frankly, the free credit monitoring is worth a lot more—the market value would be hundreds of dollars a year,” the FTC claims. “And this monitoring service is probably stronger and more helpful than any you may have already, because it monitors your credit report at all three nationwide credit reporting agencies, and it comes with up to $1 million in identity theft insurance and individualized identity restoration services.”
The FTC notes that while the money set aside for the general cash payout option was capped at $31 million as part of the settlement, those who had their identity stolen may still be able to recoup their costs for time spent getting their life back in order. This segment of compensation may be capped as high as $425 million, the FTC said.
“Say you had to pay for your own credit freezes after the breach, or you hired someone to help you deal with identity theft. The settlement has a larger pool of money for just those people,” the FTC says. “If you’re one of them, use your documents to submit your claim.”
While free credit reporting and $1 million in identity theft insurance isn’t nothing, the sudden cash shortage suggests that the FTC’s original settlement didn’t go far enough in compensating consumers for one of the biggest data breaches in American history.