Posted on June 24, 2009 by Amy C. Purcell

TJX Reaches Settlement In Data Security Breach Investigation

TJX agreed to pay $9.75 million to forty-one states to settle an investigation of a data breach that it reported in January 2007.  $2.5 million of the settlement amount will be used to create a data security fund for those states whose residents were affected by the data breach.  TJX will pay $7.25 million in settlement and investigation costs.  The settlement requires TJX, among other items, to take specific steps to tighten data security and to provide notice to consumers within ten days in the event of another data security breach.  The settlement also allows state governments to monitor TJX's data security efforts for three years.
 
TJX continues to emphasize that it "firmly believes it did not violate any consumer protection or data security laws."  TJX's chief financial officer, Jeffrey Naylor, stated that the settlement will allow TJX and state attorneys general to take "leadership roles in exploring new technologies and approaches to solving systematic problems in the U.S. payment card industry." 
 
TJX reported that eleven people were arrested on hacking charges, two people pleaded guilty to hacking charges and two people have pleaded guilty to related charges in connection with the data security breach.
Tags: , , , , , ,
Posted on May 13, 2009 by Scott L. Vernick

Federal Circuit Court Of Appeals Rules That TJX Litigation May Proceed On State Law Claims

The First Circuit Court of Appeals has ruled that, by accepting credit cards for payment, retailer TJX and its processing bank, Fifth Third, could have negligently misrepresented to credit and debit card issuers that their data security practices were in compliance with the security protocols established by VISA and MasterCard operating regulations. The First Circuit also ruled that, based on either on the issuers' claim of negligent misrepresentation or a possible violation of Section 5 of the Federal Trade Commission Act, TJX and Fifth Third could have engaged in deceptive practices in violation of Chapter 93A of Massachusetts General Law. While Chapter 93A may require egregious conduct, systemic recklessness, as distinct from deliberate wrongdoing or self-benefit, may be sufficient to sustain a claim.

After a security breach in 2005, in which computer hackers gained access to TJX's wireless network and compromised the security of more than 45 million customer accounts, credit and debit card issuers filed suit against TJX and Fifth Third to recover losses they sustained as a result of fraudulent use of cardholder information.

Tags: , , , , , , , ,