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banking-group-sues-tjx

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In an interesting development in the economics of information security and data breaches, a group of banks is suing TJX for "negligent misrepresentation". According to Massachusetts Bankers Association CEO Daniel Forte:

"Banks all across the nation re-issued debit cards as a result of the TJX data breach. Preliminary estimates of the costs vary from institution to institution, up to $25 dollars per card," MBA officials said in a statement. "This alone would run into many millions of dollars for banks throughout the country. Moreover, when fraud occurs, banks generally cover the entire fraud, replacing money in customer accounts to protect their customers."
The banks, which once owned Visa, the creator of the PCI data security standards, now recognize that there costs are an externality in that system. The tort system is a pretty good system for dealing with externalities. Unfortunately for those who like to have real data on these matters, if the case is settled out of court, we probably won't know how much it actually costs TJX. I continue to believe it will not affect their brand or sales , but it will hurt their stock price as would any expenses that do not generate revenue.

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