December 21. 2013

Target could face class action lawsuit, other litigation over data breach

Target Corp. could face costly class action lawsuits from consumers as well as litigation from banks and state attorneys general after its massive data breach in which hackers gained access to credit and debit card data for as many as 40 million customers.

Patrick Fowler, a partner and business liability attorney with the Snell & Wilmer LLP law firm in Phoenix, said the legal costs to Target could easily be in the tens of millions of dollars.

“It is about as bad as it can get in terms of credit and debit card information,” Fowler said.

He said hackers may have been able to obtain unencrypted point-of-sale information with consumers’ personal information, account numbers, credit card expiration dates and security codes.

He cited a 2007 data breach case involving TJX Cos, the parent company of T.J.Maxx and Marshalls. That hacking case compromised 45 million consumers and ended up costing the retailer $256 million, according to the Christian Science Monitor.

Consumers could sue Target if hackers rack up charges and impact their credit. Banks and credit card companies could take Target to court over the costs of issuing new cards and dealing with fraudulent purchases.

Target announced the breach started Nov. 27 and ran through Dec.15 and could impact U.S. customers who shopped at stores. The Minneapolis-based chain has 47 stores in Arizona and employs thousands of people here.

“We have determined that the information involved in this incident included customer name, credit or debit card number, and the card’s expiration date and CVV (the three-digit security code),” the company said in a statement.

Fowler said the Target breach should also be a wake-up call for small and midsize local businesses. He said just because a company is smaller and located in Phoenix does not mean hackers will not go after credit and debit card data.

He said hackers are actually going after smaller companies more because it can be easier and quicker to hack into systems and computers.

“It’s a path of least resistance for hackers,” Fowler said.

Fowler is still not sure the hit Target will take with customers.

”They’ll never know which customers between now and the end of the holiday season went to another store because of what happened,” Fowler said.

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