In the 2017 data breach of the financial company known as Equifax, important personal data including banking information, social security numbers, and more was leaked and made public. Due to the cyber-attack on this centralized credit agency, there were reports of the company behaving in unfavorable manners to the public. Before the attack, the company was charging a fee to freeze the credit account for an individual. For several days after the attack on Equifax, the company charged individuals a fee for the privilege to freeze their credit accounts and protect their information. The public made several complaints and finally the company gave in to allow all users to freeze their accounts, however the company’s website continued to charge individuals for freezing their account. In this case analysis I will argue that utilitarianism shows us that the Equifax breach harmed millions of people by not allowing easy access to security features and expedited service in a time of data crisis. The actions performed by the company were not performed for the good of the people, and in one case, was even for the benefit of top executives.
In the works of Friedman, he discusses from the viewpoint that a business has no social responsibility to the public other than maximizing profits to the owners, or shareholders. He says, “A corporation is an artificial person and may have artificial responsibilities, but a business cannot be said to have responsibility.” The responsibilities referenced in this quote are referring to the responsibility of helping with environmental protection or hiring “hard-core unemployed” to the workforce to diminish poverty levels. Friedman states in his texts that it is not, however, the corporation that has the responsibility, but the corporate executive. In a free-enterprise market, a corporate executive is considered to be employed by the owners of the company. This means that the corporate executive must act as an agent to the owners and spend corporate money on interests of the shareholders and conduct business in such a way that it benefits the owners. Friedman also points out that the businessman is also a person in his/her own right and that they may feel to spend their own money on what they feel to be “social responsibilities”. If he does this, then the businessman would be using his time and energy on causes that he feels necessary rather than using his time and energy to spend making more profit for his employers. Similarly, if the businessman were to spend corporate money on a cause he deemed as a “social responsibility”, he would be indirectly spending the money of the shareholders and serving as a principal instead of an agent.
During the Equifax breach of 2017, the public was outraged at how difficult it was to protect their data that was required by almost every important aspect of an adult’s life. Equifax, before receiving numerous complaints, was charging individuals to freeze their credit files. Before the breach of Equifax’s systems, charging this fee wasn’t necessarily a problem, maybe only a slight inconvenience. However, after the breach, the public demanded that they are given the ability to freeze their credit files at no cost. This offers additional access to security features at no extra cost to many lower-class individuals who may already be struggling with debt. According to Freidman, a business should act in a manner that would further increase profits and provide more wealth to the owners. By removing this fee from the general policy of the company, the corporate executive is exercising his social responsibility by allowing the public to have free access to this security in a time of data crisis. Removing the fee will directly cause the company to make less money and, thus, indirectly cause the shareholders to lose money as well.
Equifax charging a fee to freeze the credit files of individuals despite a data breach that happened recently, shows that the company is putting potentially millions of people at risk of identity theft and financial destruction. By activating this service on the credit files of the individual, the individual is protecting themself from anyone who potentially obtains their information as a result of the 2017 breach. Information including social security numbers, addresses, and banking information is left to be taken advantage of in the form of opening various credit cards or loan accounts in the name of the victim. Individuals who are unable to pay the fee for any number of reasons including, but not limited to, poverty or financial emergency are not able to receive the security provided by this service. By not receiving the security immediately, the attackers are able to use whatever open information is available to apply these attacks to the victim.
Utilitarianism states that in order for an action to be perceived as morally good, the most good for everyone must be obtained as a result of the action. In the situation of Equifax, the company refused to provide a free, necessary service for days after the breach was announced and provided objectively bad customer service. Top executives of the company were also reported to have sold stock just after the discovery of the breach and just before telling the public about this information. This action also does not align with the views stated by Friedman where he discusses the corporate executive to be an agent to the shareholders of the company and not as a principal. By selling stock in the company before the public, and most likely shareholders, has knowledge of the breach, the executive is depriving the shareholders of the opportunity to also sell stock in the same manner to have a fair probability in gaining profit. The executive gains a massive advantage in wealth while also violating insider trading laws. The actions performed by the executives was morally unethical and does not align with the views of utilitarianism.
To follow the rules of utilitarianism and provide the most good for everyone, the company should have implemented a free, credit-freezing service that would allow everyone access to the service before the attack occurred. By implementing this policy, individuals who are in a financial crisis at the time credit files need to be frozen, they are able to do so without a paywall awaiting them. With this solution provided the company then loses out on the profit it was getting from these fees. To combat this decrease in profits, the company could implement a tiered system of services provided by the company that they could charge for. However, in this system, the simplest service of freezing credit reports shall remain free to allow basic protection to all users of the Equifax system.
In the works of Anshen, he discusses the concept of businesses having a social responsibility to the public. His overall concept shows that business should be more active in the potential economic and environmental consequences that arise from the “inevitability of business”. Business members get profit because they play the social function of taking raw materials and producing goods and services that improves the quality of life for society. He believes that businesses practicing in helping poverty and the “hardcore unemployed” has a greater potential to directly affect society. The contamination brought by companies is often overlooked and not consistently monitored. Anshen is proposing that along with the environmental contamination, the economic activities of the corporation can be viewed as a “contaminant” if they present safety hazards. Anshen describes unsafe economic activities to run from automobiles to atomic power plants, however, in modem times these parameters can also extend to the financial companies that are centralized in the financial system.
The Equifax company is a vital central agency for the credit information and files of millions of people. They are a private business that seeks to gain more profit, however, the concepts shown by Anshen explain that Equifax should be “compelled to minimize these hazards by conforming with stipulated levels of acceptable risk … and performance specifications.” This explains that the corporation should be taking extra measures to make sure the information of the users is protected even in the event of an attack. Anshen makes special note that an increase in rigor, in this case extra security for data protection, would be reflected in a direct price increase to the consumers. This would in effect change the demand of the product and possibly change consumer habits. In the case of Equifax, this cannot just simply be done.
The company provides the public with appropriate credit ratings and interest rates on loans attached to houses, cars, and other various personal items. Their social responsibility is to make sure that the extremely sensitive data being used to format the credit ratings doesn’t get leaked or made entirely public. This would mean the company should develop a top-of-the-line security system that includes backups and hardcore encryptions.
As mentioned before regarding the view of utilitarianism, an entity must perform an action in a means that provides the most good to largest group of people. Having an attack occur against the company concludes that the system put in place was not strong enough to hold off the attackers. The social responsibility of the company would be to provide protection over the data the company was collecting from the people. Developing a better security system to alleviate data breaches demonstrates a greater social responsibility from the company and provides security to all users who have entered sensitive information. Charging a fee to freeze the credit files of an individual goes directly against one of the potential social responsibilities proposed by Anshen. This responsibility states that a business should help lessen the problems associated with poverty or unemployment. The fee enacted by the company could potentially deprive someone of the necessary security features that are locked behind the paywall. In an event of financial crisis or extreme poverty with loans and credit card data attached to the name, sensitive information is free to be used if collected by the attackers.
The 2017 data breach of Equifax caused the sensitive information of millions of people to be leaked into the public and made available for use to create loans and/or credit cards under the name of the victim. A company that is centralized in the financial system must have intricate and top of the line security to protect that sensitive information. Having a stronger system could have prevented millions of individual’s information from being released. Having a fee in place to freeze the credit files of an individual also goes against the social responsibility of a business to help prevent issues of poverty and unemployment. The individual is placing the trust in the company to use the sensitive information provided in only the ways necessary and to protect any data that is kept to the highest security possible to prevent any attacks from occurring.