TJX Faces Increasing Costs since its Data Breach
The financial loss to TJX due to the data breach it had suffered could be a significant $1.6bn (800m pounds). The owner of U.K. discount retailer TK Maxx could have its cost even higher than what it estimated, according to a security vendor.
TJX suffered the world's worst data theft when information on 45.6m credit cards was compromised. The information was stolen from the retailer's computer systems in Watford, Hertfordshire that held the credit card data of an un-estimated number of customers.
TJX admitted in its filing with U.S. Securities and Exchange Commission that the costs could go up even higher in future. The company bears liabilities to customers, banks, credit/debit card firms and government entities as a result of the intrusion, it said.
When TJX filed its first report, it was thought that the data compromise happened in December 2006 affecting only a small number of customers. This, however, proved wrong later when TJX reported that the breach occurred earlier, around May 2006. But still later, evidence showed that probably the criminals accessed the systems in July 2005. Then in March 2007 the retailing company said the information theft involved approximately 45m credit and debit cards. But the Wall Street Journal, based on investigators' reports said that about 200m accounts might have been hacked.
In the meanwhile, the figures have gone up since the retailing company's announcement on May 2007 that it had imposed an after-tax charge of $12m (6.04m pounds) for the April quarter of 2007. Also the Bankers Association at Massachusetts representing various banks has filed a lawsuit against TJX demanding that the company to compensate their losses due to the data hack.
TJX said that with regard to the total theft of nearly $20m, it recorded charges in Q4 of 2007 and Q1 of 2006. These charges comprised of investigation costs, tightening of systems security, communication with clients, and costs relating to technical, legal and other issues. The alarming issue in the report is not that the expenses for the company are growing every quarter, but the additional financial woes TJX faces relating to a number of lawsuits against it.
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» SPAMfighter News - 27-06-2007