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Lots of outrage, but little else will come out of Equifax security breach

Indignation over Equifax's massive customer data breach is sparking calls for a crackdown on that company and the credit reporting industry. Unfortunately, the odds of that happening are between slim and none.

Yes, some influential lawmakers are livid and demanding action. They're using the Equifax debacle in a push to punish and change a sector that's long been vilified by thousands of unhappy consumers.

Yet without the support of a Republican-led Congress and White House, which both prefer dumping financial industry regulations to crafting new ones, there's little reason to anticipate approval of more muscular consumer protections.

Already, Wall Street knows the score. Investors expect Equifax to get a slap on the wrist, in the form of a fine, and then it's back to business as usual.

"It is highly likely that the company will have to pay a substantial fine, but historically, fines for these matters have been manageable," wrote Brett Horn, a Morningstar senior equity analyst, in a Friday report on Equifax.

If past is prologue, the U.S. credit bureau business doesn't have to fret much about a regulatory invasion, despite the Equifax uproar.

The U.S. government tends to be reactive — not proactive — when dealing with what is an oligopoly of three big players: Equifax, Experian and Chicago-based TransUnion.

In recent years, the Federal Trade Commission has sued all three nationwide credit reporting agencies for nearly $3 million in civil penalties, according to the FTC's website.

That's a mere $3 million sliced three ways over time.

It's like getting a ticket for jaywalking.

These credit reporting agencies don't work directly for you and me.

Instead, they sell their wares to banks and other companies seeking sensitive financial information and credit scores on customers applying for mortgages, auto loans and other types of credit.

The Equifax computer breach, which affects about 143 million consumers, is emboldening authorities at the federal and state level to push for more consumer rights.

One storyline emerging in the Equifax drama is the curtailing of mandatory arbitration clauses.

In July, the Consumer Financial Protection Bureau said financial players under its jurisdiction, including credit reporting agencies, should not be allowed to prevent customers from joining class-action lawsuits.

The watchdog agency says consumers have a right to participate in such legal actions despite having already entered into a basic user agreement — the fine print most of us never read — with a credit rating agency or other financial service company that requires the arbitration of disputes.

The bureau's idea is to give consumers a choice of using arbitration or the legal system.

House Republican lawmakers quickly voted to kill that rule and the measure — backed by the White House — is now before the Republican-controlled Senate, which is expected to soon vote on the matter. Before the Equifax breach, overturning the CFPB's ruling was considered likely, but now it's more of a toss-up.

Nonetheless, don't be surprised if Senate Republicans find a way to go along with the House's decision — even if it means cooking up a procedural detour to table the actual vote until the Equifax scandal dies down.

Why such a cynical view? Two words: Wells Fargo.

The California-based bank continues to disclose more fraudulent customer accounts — now over 3 million and counting. While the scandal unfolds, congressional Republicans are working hard to diminish consumer protections by drastically undercutting the CFPB's independence and funding.

With Wells Fargo as a backdrop, it's difficult to envision how the Republican congressional majority is going to step up, especially regarding the repeal of mandatory arbitration.

Not only does the credit reporting oligopoly depend on the arbitration dodge, so do other industries that require similar customer restrictions, including credit cards, airlines, cell phone providers, pay TV and many more.

That's a lot of vested interests, and campaign supporters, for Congress to confront and tick off.

In Illinois, a Democratic-sponsored bill was introduced Wednesday to make credit freezes free for residents of the state in hopes of hindering new account identity theft.

Seven states already have laws making credit freezes free, but if this initiative passes the General Assembly, it could be tough for pro-business Gov. Rauner to sign into law.

As of last February, the credit reporting industry tallied approximately 185,700 consumer complaints, reports the CFPB, which has tracked such data since 2012.

The most common problem reported is inaccurate information on individual accounts along with the inability to get mistakes corrected.

Now, we get to deal with getting hacked.

Wall Street is right.

Chances are that Equifax will get slapped with a fine, suffer an executive suite shake-up and be pressured by its corporate customers to beef up its security and systems.

That's probably where it will end — until the next humongous data breach occurs and we get outraged all over again.

roreed@chicagotribune.com

Twitter @reedtribbiz

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