Equifax is providing business executives with timely reminders on how to communicate about a corporate crisis.
This is not the first time the credit scoring company has responded to a crisis.
In 2017, an Equifax data breach took place in which the private records of 148 million Americans were compromised. It was reported to be one of the largest cybercrimes related to identity theft.
The Wall Street Journal reported on Tuesday that earlier this year the company sent lenders inaccurate credit scores on millions of consumers earlier this year which led to higher interest rates and rejected applications for consumers.
Statement From Equifax
In a statement on its website, Equifax blamed the situation on “a coding issue within a legacy, on-premise server environment in the US slated to be migrated to the new Equifax Cloud infrastructure. This issue, which was in place over a period of a few weeks, resulted in the potential miscalculation of certain attributes used in model calculations. Credit reports were not changed as a result of this issue.”
The company said, “We know that businesses and consumers depend on our data and Equifax takes this technology coding issue very seriously. We can confirm that the issue has been fixed and that we’ve been working closely with our customers on analysis to best meet the needs of consumers. As part of this extensive analysis, we have determined that there was no shift in the vast majority of scores during the three-week timeframe of the issue. For those consumers that did experience a score shift, initial analysis indicates that only a small number of them may have received a different credit decision.”
Public relations consultants and crisis management experts shared their insights and perspectives on how Equifax responded to the situation.
“At first glance, Equifax has handled everything completely wrong in this situation,” commented Michelle Mastrobattista, the founder and marketing strategist at Brand Paradise. “There have been numerous missteps, from the response time to the original WSJ article to apparently being aware of this coding issue since May and not addressing it proactively.”
“There is growing negative sentiment on Equifax’s social media channels. People want them to address the coding issue and be transparent with how many people were affected and how they plan to rectify the situation. Not only have they not posted a statement to social media, but it also appears that the past few days of social posts were auto-scheduled and completely tone deaf,” she said.
“If Equifax does not immediately pin a statement to the top of their social media channels, the negative comments will continue under every post having more reach and impact. Posting a statement would allow them to contain most of the comments under that thread, reducing the virality. If not, every time there is a new negative comment on other posts, everyone who ‘likes’ those posts will be notified,” Mastrobattista predicted.
“Americans are already dealing with rising prices on consumer goods, record inflation, and the constant fear of an impending recession. Now more than ever people need to feel a strong sense of trust in their financial institutions and agencies, Matt Weaver, senior vice president of PR firm Actual Agency, said via email.
“Equifax needed to lead with empathy here instead of leaning on the technical side of the error. I expect a stronger public backlash to mount in the coming days which will require the company to publicly walk back its initial response,” he speculated.
A Forced Response
“One of the pillars of responding to a crisis is truth and transparency, it’s important to acknowledge mistakes and take responsibility for the actions while providing options and resources to those who have been affected quickly and efficiently,” advised Ronn Torossian, founder and chairman of the 5WPR public relations agency via email.
“It’s disheartening that Equifax waited until a report on their mistakes was released, ultimately forcing them to respond, instead of when they were first alerted to the coding issue. Even if they were working with individual lenders, they should have released a public statement. Even more unnerving is that they continue to withhold vital information, such as specific date ranges or how users can learn whether they were among those who received wrong information from their users,” he noted.
“What other businesses can learn from Equifax’s response is if you choose to reach with truth as transparency publicly from the first moment you were alerted to the issue, you can better control the narrative. Don’t let others write your business history for you,” Torossian concluded.