Thursday, February 22, 2007

Security Breach at TJX

Recent news reports reveal that the security breach at TJX, parent company of the discount retailers Home Goods, T.J. Maxx, and Marshalls, in the U.S., and Winners and Home Sense in Canada,involves the possible compromise of more than 40 million records. According to the attached article in the Globe and Post, however, TJX maintains that the breach involves significantly fewer records, describing the number as "significantly less than millions." As further insult, the chairman of TJX sent out a letter to its "valued customers" stating that it would not pay for free credit reports, alleging that such monitoring would not be meaningful based upon the type of records stolen. Certainly such a position is an example of poor planning and damage control, where public perception and controlling media reports is vital. TJX has since amended its original estimates to increase the number of customers affected, and to state that its investigation reveals the breach may have begun as far back as 2005. Not surprisingly, the plaintiff's bar has targeted TJX as vulnerable. A class action lawsuit was filed January 29, 2007 in federal court in Boston against TJX, alleging that it negligently failed to use reasonable care to implement and maintain security procedures in order to prevent security breaches such as occurred. Could this type of negligence claim for security breaches be the wave of the future in class action litigation? Globe and Post

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