TJX Companies has reached an agreement with Visa USA by which it will establish a $40.9 million fund for banks whose credit cards were exposed in the retailer's mammoth security breach earlier this year.
The settlement is TJX's second in a series of lawsuits arising from the breach, in which years of credit card records were exposed. In September, TJX agreed to pay $7 million in store vouchers (and later, cash) to customers who had been affected. The company also promised customers a discount sale. (See TJX Proposes to Settle Customer Lawsuit for $6.5M.)
The $41 million settlement is contingent on acceptance by at least 80 percent of the banks involved. If they agree to the settlement, the banks must also agree not to pursue further litigation against TJX.
"We believe this settlement agreement provides a fair resolution of these issues, and look forward to a high issuer acceptance of the proposal," said Carol Meyrowitz, president and CEO of the TJX Companies. "At TJX, we have learned a great deal about the risks of cyber attacks and have responded aggressively to take our own security to even higher levels. We also have learned about the heightened security risks that exist across the entire U.S. retail and banking industries as a result of todays high-tech criminals."
In total, TJX has agreed to pay out less than $50 million over the breach, which exposed at least 45.7 million credit card records. During the trial, the banks estimated that the exposure was closer to 100 million records. The retailer has seen little financial impact from the debacle, and today posted a quarterly dividend of nine cents per share on its common stock.
Observers in the security industry say they aren't entirely satisfied by the settlements, which haven't forced TJX to give details on the causes and sources of the breach.
"Only the banks and credit card companies can determine if TJXs offer of a $40.9 million settlement for its data breach is adequate," says Adrian Lane, CTO of security company IPLocks. "However, what should be required as part of the settlement is a case study of exactly what happened. Here is an opportunity for financial institutions to step in and help prevent this from happening to other retailers. The cost is almost nothing, and there would be a clear benefit to the retail industry and, ultimately, consumers.
"Data breaches are a problem that all companies potentially face. But when a company is breached, responses seem to fall into one of two responses: non-disclosure or non-informative press spin," Lane says. "They either do not disclose publicly, or if obligated in some way, we get the we are deeply concerned, but we are on top of it response from press or legal teams. Security through anonymity is what this is, and it does not do anyone a lot of good."
Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message.