Most people are familiar with the recent credit card fiasco that occurred with Target at the height of the Christmas retail season. According to statements made on Target’s website, high-tech hackers installed malware (malicious software designed to harm computers and user data) in electronic payment machines used for credit card or other electronic purchases at Target stores.
In a prepared statement Target explained: “The malware was discovered on our point-of-sale systems in our U.S. stores on December 15. At that time, we disabled the malicious code and immediately began notifying our card processors and the payment card networks.”
It is estimated that up to 40 million Target customers were affected and this incident is expected to result in losses of five million dollars nationwide.
The potential for harm to over 40 million consumers is exponential and includes the possibilities of:
• Credit card information being sold on the black market
• Drained bank accounts of consumer victims
• Extensive illegal charges to credit accounts
• New credit accounts opened with credit information
• Obtaining other personal information from the victims which can be used for fraudulent purposes such as: immigration fraud, obtaining government benefits, obtaining driver’s licenses, and filing fraudulent tax returns.
• Identity theft
The lawsuits are just beginning
A class action lawsuit has been filed by an Ohio woman against Target this week after her credit card information was stolen and her bank account was drained. The allegations made in the lawsuit include: negligence, violations of Ohio’s Consumer Sales Practices Act, and invasion of privacy. So far, in addition to this lawsuit, at least 15 other class action lawsuits have been filed in Illinois, Massachusetts, Rhode Island, California, Oregon, Alabama, and Colorado. And it is likely that before all is said and done many more lawsuits will be filed by other victims.
Companies need to act quickly and definitively
While it may be some time before we know the sequence of events and exactly what happened to cause such a security breach, Target is being criticized for not acting quickly enough. And the fact that, once the company did learn of the breach it offered prepared statements and a 10 percent discount to affected customers probably did little to repair its damaged reputation and legal liability. When disasters like this happen to a company it is imperative that they act quickly and definitively to:
• Fix the problem
• Inform its customers
• Repair the damage that has been caused
• Assess its legal liability
Avoid a legal disaster and talk to experienced NY business law attorney today
In a perfect world, a company would have policies and contingency plans in place that would predict and prevent such scenarios from happening. However, often times business owners assume such things will never happen to them. But disasters happen every day to businesses throughout the country. To discuss your policies and contingency plans or any other business matter contact an experienced NY business litigation attorney today.