The stark reality of the financial cost of a data breach is revealed, as Target aims to settle lawsuit for $10m
The highly damaging and very public data breach of Target in late 2013 has resulted in another financial disaster for the giant US retailer.
The company has agreed to pay $10m (£6.7m) in a proposed settlement of the resulting class action lawsuit.
In court documents, Target has proposed to pay the cash lump sum into an interest bearing escrow account, which will be used to pay individual victims up to $10,000 (£6,700) in damages. Consumer claims will be handled online via a dedicated online website.
“We are pleased to see the process moving forward and look forward to its resolution,” Target spokeswoman Molly Snyder, was quoted by Reuters as saying.
The proposed settlement also requires Target to adopt and implement data security measures such as appointing a chief information security officer and maintaining a written information security programme.
However, the retailer seems to have learnt most of the lessons following the breach, which resulted in the departure of both the chief information officer (CIO) Beth Jacob, as well as the chief executive officer (CEO), chairman and president Gregg Steinhafel.
Target reported on December 19, 2013 that about 40 million payment card accounts were hacked during the pre-Christmas shopping season. Later, in an update, it admitted that about 70 million customers had their addresses, phone numbers and other information compromised.
The problems started when thieves broke into the point-of-sale (POS) system at Target in the October-November 2013 time frame. At that time, they stole the data from the magnetic stripes on the back of credit and debit cards. Target, like virtually all other stores in the US, depends on that information on the magnetic stripe to read all the relevant credit card information to make a sale.
The data breach also resulted in other lawsuits. For example, this time last year, two US banks filed a lawsuit against security firm Trustwave, after they accused it of failing to identify vulnerabilities at Target.
But there are also reportedly other different lawsuits ongoing as a result of the Target data breach.
Earlier this month for example, three men were arrested and charged with what was described by authorities as “one of the largest reported data breaches in US history.” The men are said to have made “millions of dollars” after they reportedly hacked in systems belonging to email providers in the US and stole one billion addresses.
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