The late 2013 data breach impacting 70 million Target customers continues to cost the company which in their latest financial statements reported $4 million in related expenses for Q4 2014. The total loss to Target for 2013 and 2014 related to the data breach was $162 million, but would have been even larger if not for the $90 million that was offset by insurance receivables.
While $162 million in losses is substantial it could have been much worse, and the costs associated with the major data breach may continue to accrue. If not for the insurance policy Target would’ve reported a total loss of more than $250 million related to data breach. In late 2014 issuing banks were able to continue with a lawsuit against Target and in early 2015 a federal judge permitted a group of plaintiffs, representing consumers impacted by the breach, to proceed with a class action case which could also lead to high legal and/or settlement fees costing the multi-channel retailer.
The costs reported by Target in recent financial statements reflect direct costs associated with the data breach compromising 40 million payment cards. While this takes into account things like legal fees, investigations and credit monitoring for consumers it does not include indirect costs, such as brand damage, which can also be substantial.
For more information: