TJX’s Settlement: Marketing Chutzpa At Its Best
Written by Evan SchumanSeptember 22nd, 2007
Only TJX could take a lawsuit settlement from the worst retail data breach ever and try and turn it into an upsell situation.
TJX's multi-part settlement of all of the consumer lawsuits against it for its massive data breach is a fascinating denouement to the TJX saga. What makes this latest twist so delicious is that TJX has played this debacle the way a retailer should, assuming the retailer is Niccolo Machiavelli.
When admitting to a massive databreach impacting some 46 million of your customers and when also conceding by implication that much of it was your fault given inadequate security measures, most companies would be chagrined, embarrassed and perhaps even a little bit ashamed. But not our heros.
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6 Comments | Read TJX’s Settlement: Marketing Chutzpa At Its Best
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September 23rd, 2007 at 1:46 pm
I have to ask: did the customers whose security was breached agree to those terms or did the attorneys general in charge of the cases?
Most consumers are not stupid enough to agree to such a settlement. A consumer would know that he/she is being duped into coming back into the store to spend money in it.
However, if the settlement was accepted by the injured parties, you have to give TJX credit for their chutzpah. It appears that it worked.
September 23rd, 2007 at 5:41 pm
Editor’s Note: The answer is technically “neither.” First, this case is entirely distinct from the state Attorney General cases that are still pending. (Actually, those cases are consolidated under Massachusetts, so it’s functioning as one action.) The state AGs have no direct involvement in this case.
This deal was agreed to by the attorneys representing certain users and TJX. I am strongly assuming that most of the consumers involved were briefed and signed off. Of course, there are millions of consumers involved so it would only be the named consumers who would have had any say.
September 24th, 2007 at 2:57 pm
You’ll see some very similar “marketing” tactics from VerizonWireless in their “Campbell Class Action Settlement” from 2006
http://www.verizonwireless.com/b2c/globalText?contentType=Legal%20Notice&textId=87 .
Multiple options offered to the Class. Most involve insiginificant discounts on very high-margin accessories.
And, on top of it all, their method of submission for these settlement options was so complex, that you ended up spending $50 worth of time to receive a $10 “payoff”.
Evan – thanks for shining a big light on the games people play. Never ceases to amaze.
September 27th, 2007 at 9:33 am
I never really considered how TJX actually timed every communication to work to their advantge.
My guess is that the gift cards will be sent to customers to arrive 11/19-11/21, right before Black Friday.
Then a settlement will be announced with the state AGs will be announced Christmas Eve.
September 27th, 2007 at 10:42 am
Editor’s Note: Good thought, Eric, although I doubt they’ll have the settlement improved in time for Nov. 19. Other than that, yes, that is likely what they would have tried to do.
As for the AG settlement, that will now prove interesting. All that the AGs will actively pursuing–the last time I checked–was credit card monitoring reimbursement. Given this agreement, they might wait to see if the settlement is approved. If it is, they might just echo it.
September 27th, 2007 at 5:00 pm
It is significant that TJX is once again being secretive about the steps it is taking to secure its network since it was secretive about the breach itself. The real challenge with network security is that every new technology brings both benefits and risks and forethought must be given to those risks preferably before the technology is implemented. While there is some discussion about whether or not the breach at this retailer was wireless, and it is our opinion that it was, it is important to think about network security strategy in a global way instead of a siloed one and wireless security must be part of that strategy, whether or not you have deployed wireless. With the proliferation of wireless, wireless security is a must have not an afterthought, and it need not be an expensive and daunting task to implement.