If you filed for a cash payout from Equifax as part of the credit bureau's settlement for its massive 2017 data breach, you're probably not getting anywhere close to $125.
On Thursday, Dec. 19, a Georgia federal judge awarded $77.5 million to the attorneys representing the class of consumers against Equifax. That's over 20% of the roughly $380 million settlement fund Equifax agreed to set up to directly help consumers affected by the breach, according to the Hamilton Lincoln Law Institute, which house the Center for Class Action Fairness and opposed the high fee award.
It's also one more reason why the consumers who sought a cash settlement from Equifax won't be getting the full $125 as initially expected. In fact, consumers were never going to get $125, says Ted Frank, director of litigation for Hamilton Lincoln. "That's down to $6 or $7 [per consumer] now. Maybe even less than that," he tells CNBC Make It.
In July, credit bureau Equifax agreed to pay a total of nearly $700 million for its role in the massive 2017 data breach, which impacted 147 million consumers. The settlement included a $380.5 million restitution fund dedicated to consumer compensation and fees associated with the case.
Under the terms of the settlement, affected consumers could potentially get up to $20,000 in reimbursement for out-of-pocket expenses they incurred because of the data breach. But even if you didn't suffer any direct harm from the breach, you could claim free credit monitoring or a flat cash payout of up to $125 if you already have credit services in place.
But the Federal Trade Commission announced in late July that because of the high interest in the $125 cash compensation option, consumers who picked the payout might end up getting far less than initially expected. It turned out that the money set aside in the roughly $380 million restitution fund specifically for cash compensation was capped at $31 million, so if more than 248,000 consumers picked this option, the total compensation for each person would be less.
In fact, the FTC took the unusual step of urging consumers to pick the free credit monitoring instead of the cash payment, saying the service was worth "hundreds of dollars" and comes with identity theft insurance and restoration services.
And then in September, consumers who filed for the $125 cash payout were sent an email with the subject line: "Your Equifax Claim: You Must Act by October 15, 2019 or Your Claim for Alternative Compensation Will Be Denied." Under the new requirements, consumers had two options: verify their claim by providing more information or amend their paperwork to opt for a non-cash settlement.
If consumers failed to file the additional information before Oct. 15, 2019, the notice said their claim would be completely rejected.
Now Thursday's ruling puts that $125 award amount even further out of reach, Frank says. "Class counsel in their briefing said that [consumers] were never going to get $125, and they blamed the media for it. But that's absolutely not what the press releases said, and there was a reason people thought they were getting $125."
Yet it's worth noting that if you spent money on freezing your credit, buying credit monitoring, or on other expenses because of the beach, you can still be fully reimbursed, says Amy Keller an attorney with Chicago-based DiCello Levitt Gutzler and co-lead counsel for consumers in the case against Equifax.
"Unfortunately, we think that the focus on the alternative compensation is preventing consumers from understanding that they can be fully reimbursed for the money that they spent in response to the breach," she tells CNBC Make It.
But Frank says it's still a bad deal. "The FTC let themselves get snookered by the class counsel into believing how good this settlement was. That's why their press release was misleading," Frank says. "It's unfortunate because they're supposed to looking out for consumers here and instead they signed off on a settlement where the beneficiaries are really the attorneys."
Updated to include comments from an attorney for class counsel.
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