Two months after Target announced a massive data breach in which hackers stole 40 million debit and credit card accounts from stores nationwide and the rising costs related to the incident are becoming clear.
Costs associated with the Target data breach have reached more than $200 million for financial institutions, according to data collected by the Consumer Bankers Association (CBA) and the Credit Union National Association (CUNA).
Breaking out the numbers, CBA estimates the cost of card replacements for its members have reached $172 million, up from an initial finding of $153 million. CUNA has said the cost to credit unions has increased to $30.6 million, up from an original estimate of $25 million.
So far, cards replaced by CBA members and credit unions account for more than half (54.5 percent) of all affected cards.
In a press release, CBA notes that the combined $200 million cost does not factor in costs to financial institutions other than credit unions or CBA members, nor does it take into account any fraudulent activity which may have occurred or may occur in the future:
Fraudulent activity would push the cost of the Target data breach to the industry much higher, as consumers would not be held liable.”
A post over at the Wall Street Journal Corporate Intelligence blog points out that cyber attacks like these continue to be a drain on the wider economy.
It cites a study backed by computer security firm McAfee that last year estimated the total cost of cybercrime and cyber espionage to the United States at up to $100 billion each year.
Meanwhile, legal experts caution that companies need to take stock in the wake of the Target breach and make sure they have adequate insurance in place.
A post by Emily R. Caron in Media, Privacy and Beyond published by law firm Lathrop & Gage notes that fortunately Target appears to have a lot of insurance in place.
It cites reports suggesting that between cyber coverage and directors and officers (D&O) coverage, Target has $165 million in total limits, after self-insuring the first $10 million. (Hat tip to @LexBlogNetwork for highlighting this article)
However, The New York Times recently reported that total damages to banks and retailers could exceed $18 billion according to estimates by Javelin Strategy & Research.
In addition the NYT noted that nearly 70 lawsuits have already been filed against Target, many of them seeking class-action status.
As Caron notes in her article at Media, Privacy & Beyond, there is a big gap between $165 million and $18 billion.
Check out I.I.I. facts + statistics on ID theft and cyber security.