Freshman Rep. Alexandria Ocasio-Cortez (D-N.Y.) took aim at the credit reporting agency Equifax over the weekend, criticizing the company — which disclosed a massive data breach in 2017 — and its peers for fueling what she described as a “broken” system of credit scoring that can affect people’s ability to get loans, secure housing and gain employment.
“Also a good moment to note that in the wake of the Equifax scandal, privatized credit scoring is a dice game & the credit score system is very broken too,” she said Saturday on Twitter.
Ocasio-Cortez was responding to another Twitter user who said it took decades for him to repair his credit, which was scored in the low 400s, or what another credit reporting agency, Experian, defines as a “very poor” rating.
Ocasio-Cortez herself has been the target of unsubstantiated claims that she has low creditworthiness, a rumor Snopes has debunked, in an apparent attempt to damage her credibility as a new member of the House Financial Services Committee.
She signaled that the committee may take up the issue of credit scoring in the future.
Equifax declined to comment.
In December, Republican members of the House Oversight Committee released a blistering report on the Equifax data breach, highlighting the security failures that eventually led to the theft of personal data tied to more than 147 million people. Among the most common types of data that were stolen were names, dates of birth and Social Security numbers, according to Equifax.
In addition to proposing new data security and privacy regulations designed to protect Americans against such breaches, members of Congress have also pushed fundamental overhauls to the way credit bureaus process consumer data and assess their creditworthiness.
Last month, a federal judge in Atlanta ruled that two consolidated class actions lawsuits against Equifax could proceed, Reuters reported, allowing consumers and financial institutions to seek compensation for the historic data breach.
Some investors on Wall Street are banking on the company to falter financially. According to IHS Markit, hedge funds are boosting their bets against Equifax, amassing a short position of $600 million — an amount matching highs in the fall of 2017, when the company first disclosed the data breach. Short sellers borrow shares in a company and then sell them with the hope of later buying the same number of shares at a lower price. If the stock price falls, they profit by pocketing the difference.
“One motivation for the increased short positioning may be the legal liability relating to lawsuits over the 2017 data breach” said Sam Pierson, a securities finance analyst at IHS Markit. “It’s worth noting, however, that the uptrend in short positioning began after the firm reported Q3 earnings in late October.”
Equifax said it spent more than $116 million related to the “cybersecurity incident” in its latest earnings report, up from $87 million during the same time last year. The company reported more than $832 million in revenue in the third quarter of 2018, about the same as 2017.
Business Insider had reported on the increase in short positions.
Among Ocasio-Cortez’s priorities on the Financial Services Committee are: “digging into the student loan crisis, examining for-profit prisons/ICE detention, and exploring the development of public & postal banking,” she has said.