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Equifax recently reported in its 10-Q that Equifax issued $163.1 million in 2017 in connection with the privacy violation that revealed the personally identifiable information, included welfare numbers and birth dates, of more than 145 million U.S. citizens. These figures include the cost of Equifax's existing litigation and restructuring and 50 US dollars.
$7 million to provide US citizens with free credit and ID fraud surveillance. At Equifax, we have $125 million in cyber security policy and raised $50 million to partially pay for 2017. It is not surprising that the firm also announced (in its last 10-K) that it expected insufficient protection to fully meet the full expense of the major infringement.
However, as the portfolio of holdings makes clear, the break-up-related expenses in 2017 are only the tip of the iceberg: Equityfax anticipates that "significant" expenses will be incurred in the period ahead, which include litigation and administrative expenses, higher IT and safety capital expenditures, and "increased expenses for insurances, finances, compliance efforts, and meeting stricter statutory and government regulations.
" It has been explicitly recognized by the corporation that the cyber security issue will adversely affect revenues in the future. In addition, the total charge for the provision of Equifax in the first three months of 2018 was $42 million higher than in the same prior-year period, up nearly 15% (from $300.8 million to $342.8 million). Part of this rise is due to expenses related to the cyber security incident. 2.3 million in the previous year.
SG&A also rose to $300 from $241.5 million in the first quarter of 2017. There are other charges. Due to the violation, Equifax ceased consumer promotion in 2017 and will no longer promote its product in the first half of 2018. This resulted in a decline in immediate revenues in 2017, which will persist until 2018.
Equifax's infringement cost is already developing in such a way that it exceeds the cost of other corporations affected by the hacking. Towards the end of 2013, for example, the target company sustained a violation of privacy that made 40 million customers' billing information available to invaders as well as the name, address and telephone number of up to 70 million people.
During the following year, Target had USD 192 million of charges and USD 46 million of anticipated benefits for net charges of USD 145 million. Target reported a further $39 million in net expenditures related to the violation in 2015. Only in 2016 - more than two years after the infringement - do Target's charges become subject to final investor disclosures.
Some companies do not consider their cost of security to be positive. After a 2014 JPMorgan Chase vulnerability attack that threatened the privacy of 76 million homes and 7 million small business users, JPMorgan named its $250 million spending on protecting the environment as a "highlight and success" in its 2014 financial year.