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Lawsuits against Equifax are already underway. Who can sue?

Almost as soon as Equifax announced its unprecedented data breach, two proposed class actions were filed in federal court. One was filed by a group of consumer rights attorneys who had just won the right to sue Yahoo for another large data breach. More suits are almost certain to follow.

Who has the right to bring a lawsuit against the credit reporting giant? Unfortunately, the issue is somewhat novel to the courts and there have been some differences in opinion. One thing that seems likely to happen, based on previous data breach litigation, is that multiple suits will be consolidated into a single action in a single federal court. Early-stage motions, however, will probably be heard before that consolidation.

According to Reuters analyst Alison Frankel, the federal appellate courts are divided on the question of who has standing to sue. "Having standing" essentially means that the plaintiff has actually been harmed or is exposed to real risk. In consumer cases against Equifax, the question of standing may depend in large part on whether consumers can show their data was actually stolen and used by hackers, or whether they're merely afraid that it will be.

The 3rd, 6th and 7th circuits and the District of Columbia Circuit Court of Appeal have all ruled that merely facing an increased risk of fraud or identity theft is not enough to give consumers standing to sue over a data breach. The 2nd, 4th and 8th circuits disagree. They have ruled that consumers need not show that their data was actually misused; they can sue over the increased risk.

Equifax is based here in Atlanta, however, which is in the 11th Circuit -- and the circuit hasn't ruled on the specific issue. The only similar case involved a class of plaintiffs who claimed their data had been misused. The court's opinion in that case didn't address what should happen to consumers who are faced with potentially years of risk.

Since the circuits are so divided, it's likely that the U.S. Supreme Court will ultimately decide the issue of standing. Unfortunately for consumers, that probably won't occur until after the original cases have been tried an appealed -- or unless they are turned away for lack of standing. Depending on which occurs, the decision on standing could take several years to arrive.

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