3 Reasons Equifax’s Reputation is Still Just Starting Its Downward Spiral
The initial Equifax data breach likely affects 143 million people.
(That’s an especially impressive number when you consider it’s approximately equivalent to the entire population of Russia.)
But it’s certainly not the first time a big company has been hit by hackers. Remember Target, Adobe, the Democratic National Committee, the Office of Personnel Management, and Sony? The list of affected companies and organizations is long and distinguished. So why does this hack feel a bit different?
Here are three big reasons why Equifax’s reputation problems are just beginning.
Secrets always come to light. This week, we learned that Equifax had experienced a different (and also mostly undisclosed) breach in March, which internal sources say was the work of the same intruders that attacked the credit bureau on July 29th. Sweeping things under the rug just doesn’t work (plus, of course, it’s wrong). Benjamin Franklin once remarked, “Three people can keep a secret if two of them are dead.” The point is that it’s human nature to share news; although secrets may take time to emerge, emerge they inevitably will. This fresh revelation breathes new life into the news cycle and keeps the wheels of speculation and scrutiny spinning. It’s hard for Equifax to look forthright when bad news keeps breaking.
Lawmakers are ready for action. We took a look at the media and social intelligence around the Equifax news, examining the tweets from members of Congress as well as relevant news articles. No surprises here: net sentiment was overwhelmingly negative (97 percent). Mentions more than doubled the day after the first report of the initial hack came out. Democrats have generally been more vocal than Republicans, with 72 percent of the mentions after the news to GOP members’ 28 percent. Now, we’re seeing momentum around the news from yesterday – that the House Finance Committee wants answers about the unusual increase in Equifax options trades the week before the hacking news was made public…
and this certainly won’t be the last of it. This will be an ongoing series of likely terrible news cycles for Equifax, especially given that Equifax executives sold valuable stock in advance of the security breach disclosure and now claim they were unaware of the hack at the time. The Justice Department has already opened a probe and it’s sure to have a Howard Baker-like flavor to it (“What did they know and when did they know it?”). Certainly, every time there’s a new congressional hearing, an update on the Justice Department investigation, or the nearly inevitable internal leaks (see again “three people can keep a secret…”), Equifax’s valuation will drop, its reputation will sag once more, and consumers will continue to clamor for answers and for punishment. The stock – which may eventually rebound – plummeted by 35 percent in the first week after the Street heard the news, so we can surely expect some volatility as different angles are reported.
That’s not to mention all the “paper cut” stories that will continually reference Equifax. One or two of these aren’t a huge problem, but the sheer volume will feel more like death by a thousand cuts. Think pieces on how to freeze credit or ways to protect personal information in the wake of a breach, op-eds on the need for credit bureau reform, industry experts on technology advances that may help, talking heads on the future of data privacy, Google search results that inevitably reference it, or even the news that Equifax’s social media team sent consumers to a site that wasn’t theirs for more information. There are myriad ways this story will continue to percolate.
Can Equifax bounce back? In the long run, it’s certainly possible. But for now, the credit bureau’s looking at a rough ride and an extremely long haul back from the bottom.