Three state-wide bankers associations -- Massachusetts', Maine's and Connecticut's -- announced on Tuesday that they had filed a class action lawsuit against retail giant TJX Companies for damages caused by a series of computer breaches that exposed 45.6 million credit-card accounts.
The associations, which represent nearly 300 banks, paid up to $25 per card to replace credit-card and debit-card accounts considers to have been put at risk by attackers that took information from TJX's processing systems during online break-ins between July 2005 and early this year. While the fraud is not the fault of the issuing banks, they have to pay to replace any cards they deem to have been compromised by such breaches.
"Protecting consumers is our number one priority," Lindsey Pinkham, senior vice president of the Connecticut Bankers Association said in a statement (PDF). "However, retail breaches are getting larger and more frequent and we cannot continue to absorb the costs."
Florida law enforcement officials confirmed that credit and debit accounts stolen from TJX's systems had been used as part of gift-card fraud scheme, racking up at least $8 million in fraudulent charges. Banks and consumers had also blamed the company for a surge in credit-card and debit-card fraud that came soon after the retailer acknowledged the breach, but because credit-card companies do not have to disclose the source of a breach, the evidence is still circumstantial.
"If we are successful against TJX, the nation's major retailers will finally wake up to the fact that not protecting consumer data is an unfair trade practice and that investment in data management systems to protect consumers and shield consumers against fraud and identity theft is required," Daniel Forte, president and CEO of the Massachusetts Bankers Association, said in a statement.
The Massachusetts Bankers Association represents 207 banks in that state, while the Connecticut Bankers Association has 64 members and the Maine Association of Community Banks represents 23 financial institutions.
Posted by: Robert Lemos