TJX Agrees To Pay States Almost $10 Million For Data Breach

Written by Evan Schuman
June 24th, 2009

After a probe and negotiations lasting 2-and-a-half years, the TJX chain agreed on Monday (June 22) to pay a group of 41 U.S. states $9.75 million for what appears to be the credit card industry’s worst data breach, a crime that touched more than 100 million payment cards and was revealed in January 2007.

But the dollars behind the settlement are relatively trivial for the $19 billion owner of Marshalls, T.J. Maxx, HomeGoods, A.J. Wright, HomeSense and Winners.

(See our column analyzing the TJX settlement: Is This Really The Message We Want Sent?)

The biggest impact will likely come from a wide range of security concessions, although many of the rules had already been directly or indirectly required by existing PCI guidelines.

Among the security agreements detailed in the pact:

  • Upgrade WEP wireless systems to WPA “or wireless systems at least as secure as WPA.” (The current PCI version says that “new implementations of WEP are not allowed after March 31, 2009” and that “current implementations must discontinue use of WEP after June 30, 2010.”)
  • Not store the full contents of the magnetric stripe but it may store “a portion of the contents of the magnetic stripe” as long as it’s only for “a period of time for legitimate business, legal or regulatory purposes.” (That seems to be lifted intact from PCI 1.2 section 3.1.) But like PCI, the states made no attempt to limit that “period of time” nor what might constitute “legitimate business” purposes.
  • Use VPNs “or other methods at least as secure as VPNs for transmission of personal information.”
  • TJX seems to have agreed to participate in any security-related trial if invited to do so, with the only limitation being that TJX can determine “in good faith” that “the terms and conditions of such participation” would be “feasible and reasonable.”
  • Here’s an interesting one to try and enforce. “TJX will take steps over the 180 days,” the agreement said, “to encourage the development of new technologies within the Payment Card Industry to encrypt cardholder information during some or all of the bank authorization process with a goal of achieving ‘end-to-end’ encryption of cardholder information” which the filing defined as “from PIN pad to acquiring bank.” (Seems as though a single E-mail saying “Good idea, guys!” would pretty much fulfill this obligation.)
  • “Segment appropriately from the rest of the TJX computer system those network-based portions of the TJX computer system that store, process or transmit personal information, including cardholder information, by firewalls, access control or other appropriate measures.”

    This one seems to go beyond explicit PCI rules, as PCI 1.2 says that “network segmentation of, or isolating (segmenting), the cardholder data environment from the remainder of the corporate network is not a PCI DSS requirement. However, it is recommended” and PCI adds that “without adequate network segmentation (sometimes called a “flat network”), the entire network is in scope of the PCI DSS assessment. Network segmentation can be achieved through internal network firewalls, routers with strong access control lists or other technology that restricts access to a particular segment of a network.”

  • The TJX deal requires two-factor authentication for remote access to the network, which already is a PCI 1.2 requirement (requirement 8.2, to be specific).
  • Shhhhhh. Through the two class-action lawsuits against TJX for its data breach, the chain also seemed to care far more about keeping its glitches secret than almost anything else.

    This week’s state attorneys general statement kept the secrecy game going, with the states agreeing to exempt everything related to this case from the eyes of the public. All of the states “shall treat such documents as exempt from disclosure under the relevant public records laws.”

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    One Comment | Read TJX Agrees To Pay States Almost $10 Million For Data Breach

    1. The Merchant Maven Says:

      Wow: $10,000,000. That’s a lot of cash to have to fork over for carelessness!


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    Most Recent Comments

    Why Did Gonzales Hackers Like European Cards So Much Better?

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