Equifax CEO out amid fallout from data breach

Equifax CEO Richard Smith stepped down Tuesday, less than three weeks after the credit reporting agency disclosed a damaging hack to its computer system that exposed highly sensitive information for about 143 million Americans, as well as 100,000 Canadians and 400,000 in the United Kingdom.

His departurefollows those of two other high-ranking executivesafterEquifax's disclosure that hackers exploited a software flaw that the company didn't fix to access people's social securitynumbers, social insurance numbers,birthdatesand other personal data that provide the keys to identify theft.

Smith, who had beenEquifax'sCEO since 2005, will also step down from the chairman post.

• 100,000 Canadian victims: what we know about theEquifaxbreach

PaulinodoRegoBarrosJr., most recently president of the Asia Pacific region, was named interim CEO, while board member MarkFeidlerwas appointed non-executive chairman.

Equifaxsaid it will look both inside and outside the company for a permanent CEO.

Equifaxsaid Smith was retiring, but will not receive his annual bonus and otherpotential retirement-related benefits until the company's board concludes an independent review of the data breach. If the review does not find Smith at fault, he could walk away with a retirement package of at least $18.48 million US, along with the value of the stock and optionshewas paid out over his 12-year tenure.

Class action lawsuits

Even with the departures of three top executives,Equifaxis still facing several inquiries and class action lawsuits, including congressional investigations, queries by the Federal Trade Commission and the Consumer Financial Protection Bureau, as well as several state attorneys general.Threeexecutives, none of them among those who have left, were found to have sold stock for a combined $1.8 million beforeEquifaxdisclosed the most serious breach, though the company says they were unaware of it at the time.

Although analysts had previously applaudedEquifax'sperformance under Smith, he and the rest of his management team had come under fire for lax security and its response to the breach. Confusion over the terms of credit-monitoring protection and jammed phone lines added to people's ire. Its stock has lost a third of its value a $5.5-billion setback.

Equifaxtried to appease incensed lawmakers, consumers and investors by announcing the unceremonious retirement of its chief security officer and chief information officer, who were responsible for managing and protecting the company's technology. But that wasn't enough, with lawmakers drawing up bills that would impose sweeping reforms onEquifaxand its two main rivals,ExperianandTransUnion.

Smith had been scheduled to appear at two congressional hearings next week that would likely have turned into a public lambasting. The House energy and commerce committee said in a tweet that it still plans to hold its hearing Oct. 3. A member of the Senate banking committee said he still wanted Smith to appear on Oct. 4 as planned.

"A CEO walking out the door just days before he is to appear before Congress is an abdication of his responsibility. This company has jeopardized the financial health and security of 143 million people, and they need to be held responsible. So I fully expect Mr. Smith to testify before the banking committee next week, regardless of the timing of his retirement," said Sen. BrianSchatz of Hawaii.

Breach preventable

The data breach might not have happened ifEquifaxhad responded promptly to a March warning about a known security weakness in a piece of open-source software called Apache Struts. Even though a repair was released,Equifaxdidn't immediately install it. Digital burglars used the crack inEquifax'scomputer systems to break in from May 13 through July 30, according to the company's accounting.

Equifaxsaid it didn't fathom the breadth of information that had been stolen until shortly before issuing a public alert on Sept. 7, triggering the wave of withering condemnations.

The jobs of otherEquifaxexecutives could still be in jeopardy. The three who sold shares, includingEquifax'schief financial officer, are under scrutiny.

Smith's departure also won't make life any easier for most of the U.S. adult population who had their information accessed and now must worry about impostors assuming their identities to obtain credit cards and apply for loans.

EquifaxInc. is providing a year of free protection against identify theft for anyone who wants it, but some lawmakers are trying to pressure the company into extending that offer for the next decade. Some experts say that still isn't enough to guard against identify theft and are advising consumers to put a freeze on their filesatEquifax,ExperianandTransUnionto prevent anyone from getting a loan under their names.

A credit freeze though creates its own headaches since it also prevents the person making it from getting a new credit card, mortgage, auto loan or even an expensivesmartphonepaid through monthly instalments. It also costs money to do atExperianandTransUnionin most states.Equifaxis temporarily waiving its normal fee for credit freeze as another part of its effort make amends for its security breakdown.