This post was last updated on November 22nd, 2021 at 01:14 pm.
QuickBooks is going to start sending payroll data to consumer credit agencies like Equifax, which has already amassed 300 million current and historic payroll records. This QuickBooks’ policy change will take effect later on this year unless organizations ‘opt-out’ by July 31st. It was nice of them to give companies 30 days to ‘opt-out’ of this program. Additionally, it’s the employer’s, and not the employee’s decision to share the data. The question becomes who’s data is this to share — the employer’s or employee’s data?
So why the change in QuickBooks?
QuickBooks’ change is twofold. They are trying to give people a ‘free’ new service that will let millions of small employees get instant access to employment and income verification services when they wish to apply for a loan or line of credit. The other reason is a little more self-serving for QuickBooks. QuickBooks is selling this data to the three credit agencies to make money. As the old saying goes,
There’s no such thing as a free lunch!
As my dad would tell me when someone is giving you something for free, you need to watch out. Typically there’s a nefarious reason behind it. There are very few things that are truly free in life without some string attached.
QuickBooks plans on sharing data from 1.4 million organizations with the three consumer reporting agencies. With QuickBooks coming on board, the volume of individual data that will be shared will reach at least 80 million individuals — possibly more.
What about other payroll services like ADP? According to this KrebsOnSecurity post, ADP does the same thing. They sell the payroll data which are mostly larger companies. Then what happens is that the three consumer credit agencies sell this data to credit card companies and other interested parties. Keep in mind ADP is the largest payroll software provider in the US. The three consumer credit agencies wanted to get the payroll data from the smaller companies, which mostly use QuickBooks so they covered all the bases — big and small companies.
What could possibly go wrong?
While the free service they are trying to get people to use sounds great as loans may get processed faster, there are some downsides to this kind of data sharing.
First, in 2017 Equifax, which stores hundreds of millions of individual’s data had a data breach where 145.5 million Americans personal and financial data. The cost of this data breach was about 1.4 billion dollars as consumers froze their accounts with the three consumer credit agencies, which cost each person money for someone else’s mistakes. The average amount people paid was $23.00. About 38% of the people that did freeze their accounts paid $30.00 or more to do it. Sounds fair when someone else makes a mistake and you pay to correct it and protect yourself, right? Amazingly after this data breach, one million employers continued to sell data to Equifax, according to KrebsOnSecurity.
By selling your payroll data to these companies, you will get more credit card junk mail and email offers. The consumer agencies aren’t buying this information to just store it for a rainy day. They are reselling it to credit card companies and other interested parties. After all, they know exactly how much you make along with your monthly bills via a one-stop-shop called the — credit reporting agencies. They will know exactly how much they can milk out of your discretionary income. Then they will tailor products to your wants. Sounds awesome, right?
We would be remiss if we didn’t talk about identity theft. The majority of people do not have their accounts frozen which stops new accounts from opening. This is what hackers and other white-collar criminals are betting on. How easy is it for someone to get your information? You may want to check out this webpage. Once they have your information they open up accounts in your name, then buy a bunch of stuff all the while you are oblivious to the fact that you have one or more new accounts in your name racking up big balances.
Can IconCMO help you avoid this for your payroll?
Yes. Icon Systems’ product IconCMO with payroll doesn’t report information to these credit reporting agencies. You can say that IconCMO’s payroll is self-contained. The only agency the data is sent to is the IRS via consent from the organization (ie the employer). There’s no getting around this IRS reporting. 🙂 According to KrebsOnSecurity, the payroll data that Equifax collects and uses gives them one-fifth (20%) of their annual revenue — 3.1 billion. In other words, they receive 1.3 billion dollars from selling your data to credit card companies, banks, and other interested parties.
Good post. QuickBooks is a well-known company that provides people with HR software to help manage their employees. They have announced they will be sending payroll data to credit agencies like Equifax. While this may seem scary for some, I think it’s a great idea and can’t wait until the feature goes live later in the year!
Icon Systems says
I can see how this enhancement would be a good thing for HR professionals and their software to make their job somewhat easier. There is a cost to the ease as we outlined. Given the track record of the companies involved we would be remissed if we didn’t look at those risk to the individual that creates a hotbed for identity theft and other bad activity. I think more people will be freezing their accounts to cut down on this kind of activity. Thank you for the comment.