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CU System
Heartland breach price tag 32 million so far
PRINCETON, N.J. (8/11/09)--The price tag so far for history's largest data breach--the breach announced Jan. 20 by Heartland Payment Systems--is $32 million so far, the company said in its filing Friday with the Securities and Exchange Commission (SEC). According to the filing, the Princeton, N.J.-based payments processor expensed $32 million in the six months ended June 30 for expenses from the breach. Most of the charges--totaling $22.1 million--related to fines imposed by Visa and MasterCard in April against its company and its sponsor banks. Although the company said it believed it had a strong case, it has made a settlement offer to avoid the costs and uncertainty of litigation. In the document, Heartland said it was prepared to defend itself against all claims of liability that may be asserted or assessments that may be imposed by the card brands. The processor has not received a response to its settlement offer. Heartland said the accrual of fines and the settlement offer resulted in its recording a $14.4 million reserve for processing system intrusion as of June 30. That included $19.4 million expensed for the three months ended June 30. The breach compromised roughly 100 million credit and debit cards--the largest breach reported in history. It affected credit unions and their members--as well as other consumers and financial institutions--nationwide. The data breach spawned at least 31 lawsuits on behalf of consumers, investors, banks and credit unions. The class action lawsuits were consolidated by a judicial panel in June and will be heard in the Southern District Court of Texas in Houston. As late as July, credit unions were still reissuing members' cards compromised in the breach.
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