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May 16, 2007Cost of TJX Data Breach to Date
This past Tuesday, TJX, a Framingham, Mass. based retail behemoth reported its earnings and, according to the filing, took a $12 million dollar charge tied to the breach which exposed 45.7 million credit and debit card holders to identity theft. To date the massive breach has cost TJX $25 million.
TJX's net income for the quarter was $162.1 million, compared with $163.8 million for the same quarter last year, which represents a 1% drop in earnings. The company missed Wall Street estimates by a penny.
The breach was a result of bad guys exploiting gaps in the Wi-Fi system outside a Minnesota Marshalls. TJX said the $12 million cost for the quarter was to "investigate and contain the intrusion, enhance computer security and systems, and communicate with customers, as well as technical, legal, and other fees."
The cost of the breach to TJX is not expected to stop there (read my recent blog that predicts expenses to reach into the billions). Three New England banking associations and several individual banks are currently suing TJX for the cost of replacing compromised cards and cover fraudulent charges. They argue that TJX failed to adequately protect consumer data, and therefore should be held liable.
The company came clean about the breach in an SEC filing in March, and besides the 45.7 million card holders who were compromised, they also acknowledged that another 455,000 customers who returned merchandise without receipts also forfeited their driver's license numbers and other information to the thieves.
Tag: TJX, data+breach, Marshalls, Wi-Fi
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One wonders how many consumer class-action lawsuits will be filed.
I contacted TJX representatives a few days after they set up the customer hotlines. Apparently quite a few TJX customers were looking at their card statements for the first time and finding out that they had become victims.
These crooks had been stealing information for a long period and had been ripping people off for just as long. If people had paid more or any attention to their card statements this could have been exposed long before.
It is this lack of effort on the part of individuals that allows this type of crime to go a deep as it did.
Every one of those people who will join the class action will blame TJX for everything when they too should shoulder some of the load. While TJX did leak the info to start with it was the lack of diligence of the consumer that let it get as far as it did.
Identity theft will not slow until idividuals start stepping up and defending themselves and not rely on everyone else so much.
Posted by: Michael Durnack at May 16, 2007 10:32 PM
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