Lawmakers target Equifax over $7M IRS contract

Personal FinanceFOXBusiness

As former Equifax (NYSE:EFX) CEO Richard Smith took the hot seat on Capitol Hill again on Wednesday, senators were full of questions about the company’s sole source anti-fraud prevention contract, recently renewed with the IRS.

Continue Reading Below

“Can you explain to the American people, not just as consumers who have been exposed and breached here, but as taxpayers, why in the world should you get a no-bid contract right now?” Sen. Ben Sasse (R-Neb.) asked.

The $7.25 million contract was filed last week, at a time when the credit reporting agency is still reeling from a massive cyber breach that compromised the personal data of 145.5 million people.

Sen. John Kennedy (R-La.) said hiring Equifax for anti-fraud prevention is the equivalent of “giving Lindsay Lohan the keys to the mini bar.”

Smith professed to know little specifics about the contract, details of which were uncovered Tuesday night.

“It’s my understanding … it is to prevent fraudulent access to the IRS,” Smith said.

According to the filing, Equifax will “verify taxpayer identity” and assist in the “ongoing identity verification and validations needs of the [IRS].” The contract is a “sole source order,” meaning the IRS is granting Equifax exclusive rights to provide these services.

Sen. Heidi Heitkamp (D-N.D.) even went so far as to suggest that Equifax essentially forced the IRS into renewing the contract through protests.

“The IRS has been forced to continue your contract by your protest” she said. “That’s why your contract was continued.”

More on this...

Sen. Heitkamp urged Smith to advise Equifax to give the IRS the green light to migrate the contract to another company.

Many senators, particularly Wall Street watchdog Sen. Elizabeth Warren (D-Mass.), were concerned that Equifax was actually benefiting off of its own breach.

“The breach of your system has actually created more business opportunities for you,” Warren said, citing the millions of people who will sign up for credit monitoring beyond the free year and the fact that Equifax benefits from LifeLock purchases.

What do you think?

Click the button below to comment on this article.