September 15, 2017

Equifax and the Failure of American Privacy

Something is rotten at the heart of the American consumer credit industry and Equifax is a symptom of the problem

by Chris Thomas

Senator Elizabeth Warren (D-MA) says she is opening up an investigation into the cybersecurity breach at Equifax that exposed the credit and identity details of more than half of the adult population of the country. Simultaneously she and Senator Brian Schatz (D-HI) are introducing the “Freedom from Equifax Exploitation Act” which would prevent consumer credit companies like Equifax from charging for the service of freezing and unfreezing credit accounts.

Why this matters

The breach at Equifax puts nearly every American in a household at serious risk of identity theft. As a result the entire system of American consumer credit, which is based upon the assumption that the people taking out loans are the ones responsible for paying them back, is potentially at risk. Warren’s bill does little to address the underlying problems in the American consumer credit system but it at least prevents Equifax from profiting from the sale of credit-freeze services prompted by its own negligence.

The deeper problem

Warren’s bill can’t solve the problems endemic to the American credit industry because those problems are bigger than the industry. When the Social Security administration introduced the Social Security number in 1936 it did so to simplify the problem of identifying Americans, not the problem of authenticating them. Since then the Social Security number and other publically available pieces of data, have come to serve as an ad-hoc method of confirming personal identity. It’s a bit like having your PIN written on your ATM card, except you can change your PIN; a Social Security number is forever.

While Warren’s bill slaps a band-aid on the problem the United States badly needs a centralized, cryptographically robust, government identification and authorization system. Such a system should have natural bi-partisan appeal as it would could solve a number of other problems as well including voter id, work authorization, and concealed carry reciprocity.

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