TJX: Data breach damage $25 million and counting |
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By Bill Brenner, Senior News Writer
16 May 2007 | SearchSecurity.com |
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TJX Companies Inc.'s bottom line took a hit in the first quarter of 2007, thanks to a $12 million charge tied to the security breach that exposed at least 45.7 million credit and debit card holders to identity fraud. In total, the breach has cost the company about $25 million to date.
The Framingham, Mass.-based retail giant reported Tuesday that its quarterly operating profit missed Wall Street estimates by a penny. On a net basis, the company reported a 1% drop in earnings. It posted net income for the first quarter at $162.1 million, down from $163.8 million a year earlier.
During the three-month period ending April 28, TJX said it took a $12 million after-tax charge for costs to "investigate and contain the intrusion, enhance computer security and systems, and communicate with customers, as well as technical, legal, and other fees."
The company has paid a heavy price to bolster its data security procedures and respond to an increasing list of lawsuits. According to a various published reports in recent weeks, the total cost TJX has paid to address the breach is about $25 million so far.
Three New England banking associations and some individual banks are suing TJX to recoup the money spent replacing compromised cards and covering fraudulent charges traced back to the TJX incident. The Massachusetts Bankers Association, Connecticut Bankers Association, Maine Association of Community Banks and some individual banks argue that TJX failed to protect customer data with adequate security measures, and that the retail giant was less than honest about how it handled data.
TJX has acknowledged that at least 45.7 million credit and debit cards were stolen over an 18-month period by hackers who managed to penetrate its network. The company gave a tally of the damage in a regulatory filing with the Securities and Exchange Commission (SEC) in March, and also acknowledged that another 455,000 customers who returned merchandise without receipts were robbed of their driver's license numbers and other personal information.
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