Nine-Month TJX Loss From Data Breach Could Hit $29 Million, TJX Says

Written by Evan Schuman
May 15th, 2007

TJX reported Tuesday that, in the three months leading up to April 28, it spent another $12 million dealing with the data breach the company announced in January. That’s on top of $5 million TJX said it spend in the immediately previous three months to deal with the breach.

These figures, while not trivial, are dramatically below some industry projections of billion-plus-dollar losses. Customer loyalty?and apathy?is proving to be the key difference.

A TJX statement said the money spent “includes costs incurred to investigate and contain the intrusion, enhance computer security and systems, and communicate with customers, as well as technical, legal, and other fees.”

The latest quarterly cost comes to 3 cents per share. TJX advised investors that it expects to have to spend even more in the current quarter, perhaps another 2 cents to 3 cents per share, which would come to about another $8 million to $12 million. If that holds, it would total about $25 million to $29 million for that nine month period.

When the $16 billion chain first disclosed in January the massive data breach–where the card information of some 46 million consumers fell into unauthorized hands–it was apparently not in compliance with retail industry PCI standards, especially concerning a wireless store network where the intruders reportedly first gained access.

Although some in the industry have projected huge?more than $1 billion?costs for TJX in connection with the breach, a huge portion of those assumptions are based on guesses that TJX customers would sharply reduce purchases and that huge amounts of money would be spent contacting every potential victim. Thus far, both assumptions are not panning out.

Still, the owner of Marshalls, T.J. Maxx, HomeGoods, Bob?s Stores and A.J. Wright was careful to not predict how much they?ll eventually have to pay, especially with quite a few class-action lawsuits (from both consumers and banks) pending, as well as state Attorney General investigations and other government probes.

?Beyond these costs, TJX does not yet have enough information to reasonably estimate the losses it may incur arising from this intrusion, including exposure to payment card companies and banks, exposure in various legal proceedings that are pending or may arise, and related fees and expenses, and other potential liabilities and other costs and expenses,? it said in a statement issued Tuesday. The Company will record known losses when they become both probable and reasonably estimable.?


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.