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Gonzalez Lawyers, Judges Debate Data Breach Costs

Written by Evan Schuman
March 25th, 2010
When two Boston-based federal judges sentence Albert Gonzalez Thursday (March 25) and Friday (March 26) for a rash of retail cyber-break-ins that he confessed to orchestrating, the exact sentence may be academic. The key legal argument is shaping up to be this question: "When a retailer is breached, what's the most reasonable way to determine loss?" And the answer is proving to be as baffling—or contradictory--to the federal jurists as it is for most retail CIOs.

A new filing on Wednesday (March 24) from TJX had the chain refusing to offer the specifics behind its loss claims in an attempt to fight a federal subpoena. Attorneys on both sides raise some legitimate questions about how to fairly calculate the cost of a breach. Is it limited to what is taken or to what the thief attempts to take? Should the loss include what was actually—and successfully—accessed, or should it assume that when a card with a $10,000 limit is taken, a $10,000 loss—regardless of what the thief did—should be recorded? If class-action lawsuits are filed (and they will be filed), should the cost of lawyers and courthouse travel be included? What about payment for additional security? And perhaps a new POS system that includes that better security?

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Posted in In-Store, IT Strategy/Industry, Payment Systems, Premium Content, Security/Fraud
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