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Equifax updates user agreement at prodding of New York Attorney General
Equifax has changed its terms of service to note that users checking to see if they've been affected by a massive breach it endured are not waiving their right to file a class action lawsuit.
Prior to the update, users on social media pointed out that individuals using Equifax's tool to see if their information was compromised in a massive data breach could be giving up their rights to file or join a lawsuit against the company.
Equifax revealed on Thursday that hackers had gained access to the personal information of as many as 143 million Americans including names, Social Security numbers and birth dates.
In response, the company set up the website equifaxsecurity2017.com so users could see if their data was affected. However, fine print deep in the company's terms of service for the website includes an arbitration clause waiving the users "ability to bring or participate in a class action, class arbitration or other representative action."
New York Attorney General Eric Schneiderman (D) lambasted the arbitration language in Equifax's terms of service on Friday, calling it "unacceptable and unenforceable." Schneiderman tweeted that his office had contacted Equifax's office demanding the clause be removed.
Democratic lawmakers quickly blasted the clause as well
Ohio Sen. Sherrod Brown (D) called it "shameful," and Sen. Elizabeth Warren (D-Mass.) hammered Equifax's terms of service in a series of tweets, while praising a new rule by the Consumer Financial Protection Bureau that would ban such clauses.
The bureau in July released the controversial rule that will prevent banks and financial services companies from blocking class-action lawsuits with arbitration clauses in future contracts. The rule will also force companies to report data from arbitration agreements reached with customers.
Later in the day, Schneiderman tweeted that Equifax had complied and added language noting that its arbitration clause does not apply to "the cybersecurity incident."
The New York and Illinois attorneys general both announced formal investigations into the Equifax breach on Friday.
Many companies with agreements like this, including Equifax, argue that arbitration is a "quick and cost effective" means of resolving legal matters. But critics say that arbitration unfairly benefits companies at the expense of consumers, saying class-action lawsuits can be the most effective means of legal recourse against predatory practices by a company.
Many other companies including Amazon, Uber, Airbnb and AT&T use arbitration clauses in a variety of ways to avoid class-action lawsuits with their employees, customers and contractors. The practice has been harshly criticized and the clauses in contracts with a company's employees will be reviewed by the Supreme Court this winter.
This story was updated at 5:43 p.m. Sylvan Lane contributed