Equifax announced in 2017 that hackers stole the personal information of about 147 million Americans. The leak revealed names, Social Security numbers, birth dates, addresses and other financial data. Equifax gathered and kept this data, unlike companies that customers opt-in to use, consumers had no way to prevent Equifax from collecting and keeping their data because it is used to serve as a credit reporting agency. The company has been criticized for not patching a software vulnerability that had previously been known to attackers and for its slow response to the discovery of the attack. This led to millions of people being vulnerable to ID theft, financial fraud, and long-term loss of financial security. The leak also undermined the trust in businesses that are tasked with securing their customers personal data.<\/p>\n\n\n\n
In this case analysis, I will make the case that the Equifax breach was consequential and that it caused harm to consumers and society as it compromised sensitive personal information, causing more harm than good, which is why the company’s actions were morally wrong.<\/p>\n\n\n\n
According to Milton Friedman, the main goal of a business is to maximize profits for the shareholders’ benefit, as long as it respects the law and accepted ethics. The purpose of corporate executives is to act on behalf of the owners, so they should act in a way that will maximize the long-term value of the company. But Friedman also stresses the need for businesses to not deceive, or act unethically. Equifax didn’t even come close to meeting Friedman’s relatively low bar. It’s not just about being socially responsible, it’s about having to be secure. Equifax allowed millions of consumers to be put in vulnerable situations when it failed to patch a known security vulnerability. While investments in cybersecurity are necessary for a strong defense, the failure to invest negatively impacted customers and shareholders with lawsuits, regulatory fines, reputational harm and loss of public confidence.<\/p>\n\n\n\n
From a consequential perspective, it is definitely unethical since the overall consequences were extremely negative. Millions of people were required to watch their credit, freeze their accounts, and replace their information as much as they could, and be concerned with identity theft for years. The breach also cost businesses and government agencies a lot of resources. These harms outnumbered any short-term financial benefits to be gained by postponing security enhancements.<\/p>\n\n\n\n
Consequentialism evaluates actions in terms of their overall benefit. Improved cybersecurity would have avoided or minimized the losses to millions of people as well as safeguarded Equifax’s financial interests for the long term. Consequentialism and Friedman’s focus on responsible business management would call for Equifax to have spent more time and money on data security in the years before the breach.<\/p>\n\n\n\n
Melvin Anshen believes that companies are subject to a shifting social contract. Corporations are becoming the agents of society and the public have come to expect that they will take into account the needs of everyone interested in the company, not just shareholders. Businesses have responsibilities because their decisions can have a significant impact on employees, customers, governments and communities. Building and keeping public trust and financial success are critical to long-term success.<\/p>\n\n\n\n
The Equifax hack is just one example of the importance of Anshen’s concept. Equifax has gathered and retained very sensitive financial data that impacted most adults in the United States, but they never gave consumers the choice. The company had to protect that information as people were unable to avoid Equifax. Equifax’s failure to safeguard the information of consumers is a breach of trust that the society had for them. The consequences were not limited to financial damage. It’s not possible to just replace a stolen Social Security number, and many victims suffered from stress, uncertainty, and years of worrying about their credit. There was also a loss of trust in the credit reporting system.<\/p>\n\n\n\n
Consequentialism supports Anshen’s argument because the moral option is the one that results in the greatest total good. The investments in better cybersecurity and the public’s transparency once the breach was found would have prevented millions of people from being at risk and have maintained public trust. These actions would have resulted in greater cost, but they would have brought much greater benefits to the consumer, the company and the entire society. Both Anshen’s approach and consequentialism would have required Equifax to consider data security more important than its short-term bottom line.<\/p>\n\n\n\n
The Equifax breach is a problem for millions of consumers who have sensitive personal data exposed, and are at risk of identity theft, fraud and financial insecurity in the future. It also hurt the trust people have in the credit reporting industry and added a lot of expense to businesses and government agencies. Consequentialism reveals that the downside far outweighed whatever financial gains Equifax may have made for postponing the investment in cybersecurity.<\/p>\n\n\n\n
Under the Friedman theory, businesses should make as much money as possible, as long as they do so legally and ethically, and Equifax didn’t because it was careless and ultimately did harm to its customers and shareholders. From Anshen’s perspective, corporate responsibility is similar to how businesses need to earn the trust of society. While it is possible that no cybersecurity system could protect a company from all threats, it is the moral obligation of companies that handle highly sensitive information to take reasonable precautions to avoid known risks. The Equifax breach points to the fact that consumer data protection is a moral duty and a wise business approach as it brings the greatest benefit for all parties involved.<\/p>\n","protected":false},"excerpt":{"rendered":"
Equifax announced in 2017 that hackers stole the personal information of about 147 million Americans. The leak revealed names, Social Security numbers, birth dates, addresses and other financial data. Equifax gathered and kept this data, unlike companies that customers opt-in to use, consumers had no way to prevent Equifax from collecting and keeping their data… <\/p>\n