TJX’s Projected Breach Costs Increase To $216 Million
Written by Evan SchumanIn a footnote in its Tuesday earnings announcement, TJX increased its estimate of pre-tax charges for the world’s worst credit card data breach to $216 million. Back in August, it had projected only a $168 million pre-tax hit.
The data breach consisting of extensive cyber thief activity within TJX’s network from 2003 through June 2004 and then again from mid-May 2006 through mid-December 2006, TJX said. Court filings have estimated that the data from some 96 million credit cards was accessed during the incidents.
"This reserve reflects (TJX’s) estimation of probable losses in accordance with generally accepted accounting principles based on information available to (TJX) and includes an estimation of total potential cash liabilities, from pending litigation, proceedings, investigations and other claims, as well as legal and other costs and expenses, arising from the computer intrusion," TJX said in its SEC filing.
In the second quarter (which ended July 28, 2007), TJX "recorded an after-tax reserve of $107 million for its estimated exposure to potential losses" on top of an earlier $23 million hit, TJX said.
-Marc
November 13th, 2007 at 7:20 pm
TJX keeps taking the hits (albeit deserved!) and we still see major retailers suffering from data breaches (Gap Inc. most recently,) what will it take to open the eye’s of big business in order to protect our data? I find it interesting that at a time when the Data Loss Protection market seems to be at its height, that more companies are still not protecting their customers and their reputation by implementing a little software, or maybe even encrypt a laptop or two.
November 14th, 2007 at 2:08 pm
Oh, I see. Visa estimates resulting fraud losses of around $75 MM. (And there’s Visa’s .8 MM in penalties levied against TJX.) and there’s MC’s and other’s fraud losses and levied penalties. If TJX is liable for those losses, and we add court punitive damages to those losses, the $216 MM is likely reached, or surpassed. I’m predicting that there are untrue statements TJX made to Visa and co. to avoid getting cut off from the card networks that will render it liable.
P.S. Evan: Great articles on TJX. Thanks!