Equifax’s disclosure that hackers had absconded with the personal data of 143 million Americans after exploiting a vulnerability in the company’s cyber defenses that was largely the result of negligence has sent its shares spiraling 37% lower. And now, Bloomberg is warning that the shares of certain troubled lenders – which have already largely underperformed this year – may also be vulnerable as the fallout from the hack works its way through the US economy.
Consumers who’ve learned that their data were potentially compromised are rushing to freeze their credit, creating a major problem for lenders like Synchrony Financial and Alliance Data who specialize in retailer partnerships that offer store-branded credit cards – a once-lucrative business that has struggled as same-store sales and a flurry of bankruptcies have beset the retail sector.
‘Equifax Inc.’s massive data breach could make an already tough market outlook even more daunting for the firms behind Gap Inc.’s and Ann Taylor’s store-branded credit cards. Those retailers’ banking partners, including Synchrony Financial and Alliance Data Systems Corp., could see account originations fall off a cliff if consumers freeze their credit to protect themselves from fraud. Consumers have to take extra steps – including calling the credit bureau, going online or paying fees – to lift a block and get a new card.
This post was published at Zero Hedge on Sep 16, 2017.
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