IRS suspends Equifax contract

Tax form
The IRS temporarily suspended a contract with Equifax.

After heavy criticism from lawmakers, the IRS backed away from a contract with Equifax.

The IRS had awarded a $7.2 billion no-bid contract to the credit-tracking company to verify the identities of taxpayers creating accounts on the IRS website. It temporarily suspended that contract last week.

Lawmakers questioned the deal following the disastrous hacking of Equifax that compromised the personal information of more than 100 million people. Politico reported:

“You can’t make this stuff up,” Sen. Elizabeth Warren (D-Mass.) told reporters … after a hearing about Equifax’s data breach. “This is like a bad movie. I am stunned that in the middle of this crisis the IRS would decide that it wants to trust Equifax as a business partner. It makes no sense to me. I want to find out what’s going on here.”

But it took a second reported breach to prompt action from the IRS. Forbes reports:

The decision comes after media reports earlier today that the Equifax website may have been compromised a second time. The embattled credit-reporting company disclosed in September that it had been hacked earlier this year and the data of as many as 145.5 million Americans had been breached.

That breach led to CEO Richard Smith’s retirement. He was the third executive to leave the company. The second breach involved malicious ads directing Equifax website visitors to download a false Adobe Flash update.

Equifax blamed the malicious ad scam on a third-party vendor and that its systems hadn’t been compromised. The company said in a statement, reported by CNET:

The issue involves a third-party vendor that Equifax uses to collect website performance data, and that vendor’s code running on an Equifax website was serving malicious content. Since we learned of the issue, the vendor’s code was removed from the webpage and we have taken the webpage offline to conduct further analysis.

The IRS claims there’s been no indication data it shared with Equifax had been compromised. “The contract suspension is being taken as a precautionary step as the IRS continues its review,” agency spokesman Matthew Leas said in a statement.

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