UPDATE: KARE11 in Minneapolis is reporting that if you include attorney’s fees and other costs, Target will be on the hook for around $25 million (see article) and that payments could begin as early as April 30th.
NPR is reporting that Target has agreed to set up a $10 million fund for victims of last year’s credit card breach. The agreement still has to be approved by the judge. Individual victims could get up to $10,000.
The agreement says that Target will appoint a chief information security officer (I am surprised they don’t have one), create a formal information security program and train employees. None of this is earth shaking.
What is earth shaking is that victims will be able to be reimbursed for:
- unauthorized and unreimbursed credit card charges
- Time spent addressing charges
- Fees spent to hire someone to fix their credit report
- Higher interest rates on accounts
- Credit related costs like buying a credit report
- costs to replace IDs like SSNs or phone numbers
Victims will have to provide a reasonable documentation.
Target is still having hard times after the breach, recently announcing it will close all 133 Target Canada stores laying off 17,000 employees. Earlier this month they laid off another 1,700 employees and cancelled 1,400 open positions.
The reason why this agreement is important is that it sets a precedent that breached businesses are responsible for protecting information and are responsible for victim’s costs for dealing with the after effects of a breach.
For the most part, up until now, businesses said that they would offer you credit protection and besides that, all the other costs were your responsibility. After all, the credit card companies and banks eventually credited your account, returned overdraft charges and such.
This precedent may also mean that businesses could be liable for the effects of other, non-credit card, stolen information.
What is not clear is how or if this affects other suits pending, such as the ones the banks have initiated to recoup their costs of replacing credit cards.