TJX Offers Settlement Following Massive Data Breach
The terms of the settlement, which need court approval, would offer customers a store voucher, free credit monitoring, and a 15%-off sale.
In an attempt to reach a settlement with customers over a massive data breach, TJX Companies is offering to reimburse people for the cost of replacing their driver's licenses, three years of credit monitoring, and three-day, 15%-off sale.
The company announced the plan in an online advisory, noting that it's subject to court approval.
TJX, which is the parent company of retailers such as T.J. Maxx, Marshalls, and HomeGoods, announced early this year the loss of more than 45 million credit and debit card numbers that were stolen from its IT systems over an 18-month period. It's considered to be the largest customer data breach on record.
In August, the company reported in its second-quarter earnings that the company had to absorb a $118 million charge related to the massive security breach. For the second quarter, which ended July 28, the breach cost 25 cents per share -- 10 times more than the 2 cents to 3 cents per share company executives estimated just three months ago.
Now, TJX is trying to pin down the details of a settlement offering.
"We deeply regret any inconvenience our customers may have experienced as a result of the criminal attack on our computer system," said Carol Meyrowitz, president and chief executive officer of The TJX Companies, in a written statement. "TJX has been working diligently to reach a settlement that offers a good resolution for our customers. This Settlement Agreement addresses the different ways customers have told us they have been impacted by the intrusion(s). ... We believe that the terms of this settlement are beneficial to our customers."
Meyrowitz didn't specify how much the settlement would cost the company, but said the settlement costs were "reflected in" the $107 million reserve recorded in TJX's second quarter report, along with estimated charges of $21 million, which are anticipated to be taken in fiscal 2009.
The settlement is being set up to cover all class-action lawsuits in the United States, Canada, and Puerto Rico.
The planned settlement includes the following actions:
Customers who were notified that their driver's license information and other personal data may have been compromised will receive three years of free monitoring, along with two years of identity theft insurance coverage;
The company will reimburse people the cost of replacing their driver's licenses and other IDs;
TJX will give customers a store voucher if they incurred costs due to the security breach. The notice didn't specify the value of the voucher;
TJX will hold a one-time, three-day Customer Appreciation sale, reducing prices by 15% in all T.J. Maxx, Marshalls, HomeGoods, and A.J. Wright stores in the U.S. and Puerto Rico, as well as all Winners and HomeSense stores in Canada. The sale will be open to all customers. It is slated to be held in 2008 or later.
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