, SecurityFocus 2007-03-30
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The latest details revealed by TJX's annual report could further worsen the company's financial situation, said Bruce Cundiff, senior analyst for Javelin Strategy and Research. The company has already recorded a pre-tax charge of $5 million to pay for expenses caused by the breach.
"The more news that comes out, the worse it seems for TJX," Cundiff said. "I don't think we have seen the punishment yet that the market is going to bring to bear due to customer dissatisfaction."
In a survey that the analyst firm will release next week, Javelin found strong evidence that consumers are likely to vote with their feet.
"They are really giving a strong indication that, if they know about a data breach--and TJX is really the most publicized to date--there is a strong chance they will never shop at that store again," Cundiff said.
The retail giant is besieged with consumer legal actions as well. According to the annual report, consumers have filed 12 lawsuits against the company in the U.S. and another six in Canada. A group of Massachusetts banks have filed a lawsuit for the cost of replacing consumers' credit cards and other damages, and the Arkansas Carpenters Pension Fund, which reportedly owns 4,500 shares of the company, has commenced proceedings to open up the company's books.
The U.S. Federal Trade Commission and a group of 30 states' Attorneys General have started separate investigations. The Office of the Privacy Commissioner of Canada has also initiated a formal investigation, TJX stated in its report.
The company has hired IBM and General Dynamics to help investigate and improve its security. In addition, the U.S. Secret Service is investigating the intrusions.