Experian offering second year of credit monitoring to state for $10 million
COLUMBIA — The credit-monitoring firm providing South Carolina taxpayers a year of services for $12 million following the largest known cyberbreach of a state agency in the country will extend coverage for another year at a price of $10 million.
Mark Kapczynski, a vice president with Experian, Thursday told state representatives investigating the massive hacking of the state Department of Revenue that the company has formally offered the deal to Gov. Nikki Haley’s administration.
A decision on whether to take the offer likely won’t be reached for some time.
Haley’s spokesman Rob Godfrey said in a statement that the administration will work with the Legislature on solutions for long-term protection for affected taxpayers and improvements to the state’s cybersecurity.
House Majority Leader Bruce Bannister, R-Greenville, said the General Assembly will want to have its say on how the state approaches an extension of credit monitoring for taxpayers.
Bannister is the chairman of a newly appointed House panel investigating the breach that held its first meeting for much of the day Thursday.
A similar Senate subcommittee held its third meeting Thursday.
Several state lawmakers on the panels, both Democrats and Republicans, have raised questions to officials from Experian and the state about how the parties reached the $12 million agreement in the days immediately prior to the public announcement of the breach on Oct. 26. The contract was signed just two days after the state contacted Experian.
State Sen. Kevin Bryant, R-Anderson, has argued Experian should have paid the state for the right to provide monitoring to millions of affected taxpayers and dependents.
Experian stands to gain millions of new customers after the state’s agreement with the state expires, Bryant has said.
Taxpayers who sign up for monitoring by Jan. 31 will receive Experian monitoring for a year at no cost.
A law firm representing the state in the aftermath of the hacking has said no competitors were contacted before the Revenue Department reached a $12 million no-bid contract with the firm using the state’s emergency purchasing law.
Kapczynski told the Senate panel Thursday that the retail value of the products Experian has contracted to provide to South Carolinians who enroll is about $150 million so far. More than 932,000 people have signed up so far for the free year of monitoring, which typically is about $160. If enrollees opt for a second year, Kapczynski said they would be eligible for a reduced rate of about $80.
If all current enrollees signed up for the additional year, that would mean nearly $75 million for Experian. But Kapczynski said that, on average, only about 5 percent would likely do so — meaning a less than $4 million profit for the company.
In addition to credit monitoring for taxpayers, the services Experian is providing the state for a year include credit monitoring for dependents, lifetime credit-fraud resolution and dedicated call centers.
If the state ultimately agrees to pay the $10 million sought by the company for a second year of services, it would come in addition to the more than $20 million in costs related to the hacking already piled up by the state.
The Associated Press contributed to this report.