I hate to say it, but the Federal Trade Commission was right. We’re not going to see anything near that piddly $125 we were hoping to get out of Equifax’s massive data breach. But you know who will be seeing a pretty payday in the case? The attorneys who represented consumers.
A judge this week finalized the Equifax settlement over the 2017 breach that compromised the personally identifying information of 147 million people. The judge, of the U.S. District Court Northern District of Georgia in Atlanta, also approved for the lawyers who represented consumers in the case a massive check, one that critics argue chews into a $380.5 million relief fund set aside as relief for class members in the case.
The class counsel in October requested $77.5 million and reimbursement of more than $1.2 million to be taken out of that cash fund, arguing that the fee was justified given the “historic” nature of the settlement and the 31,000 hours they spent on the case. But not everyone is convinced that the more than 20 percent cut was reasonable.
Ted Frank, the director of litigation for public interest firm Hamilton Lincoln who co-filed a motion against the attorney fees in November, told CNBC Make It that the class counsel are “supposed to [be] looking out for consumers here and instead they signed off on a settlement where the beneficiaries are really the attorneys.”
“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 told the site. Frank further stated that none of us should expect to see that $125 award we all rushed to claim.
The $125 award was presented as one of two choices for folks who didn’t have any documented injury related to the breach: claim a petty cash award or 10 years of free credit monitoring. Obviously people wanted the free money. But the settlement pool for cash claims was $31 million and, again, nearly 150 million people were affected in the breach. If only a fraction of affected parties opted for the cash, there was little chance they were ever going to see that full $125. The FTC even told us so and urged claimants to opt instead for the credit monitoring.
Plus, if you didn’t verify or amend your claim by October 15, per an email sent to claimants in September, your “alternative compensation” was denied. If you, like me, missed this email? Well, kiss any hope of free money goodbye.
As part of the settlement, Equifax agreed to pay up to $20,000 to reimburse victims who documented expenses related to the breach, such as paying for fraud management or credit monitoring services. Attorney Amy Keller, one of a very long list of attorneys who represented plaintiffs in the case, told CNBC Make It that those who spent money dealing with the aftermath of the breach can still be fully compensated.
Even still, there’s no way of knowing the full extent of the breach’s impact. And folks who feel like they got the raw end of the deal with free credit monitoring or a couple of bucks—at most—in cash compensation are certainly justified in feeling that way. In fact, Reuters reported last month more than 900 parties had filed objections to the settlement.
Ultimately, we were never getting $125. However, it looks like a group of attorneys will walk away from this mess with a pocket full of money.