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News

Data breach proves expensive for TK Maxx

Smoothwall : 15 August, 2007  (Technical Article)
Costs of data protection fall into insignificance compared to losses resulting in data losses at the hands of hackers according to Smoothwall.
When TK Maxx, owned by TJX, suffered at the hands of hackers when they stole almost 46 million credit card details from its computer systems in the UK and US, the company knew it would be costly. However, after announcing its Q2 reports it seems that the cost to the business has been staggering - $256 million to be precise.

Tom Newton, product manager at SmoothWall, suggests that other businesses should learn from TJX's misfortune and ensure that every conceivable security breach is (at the very least) considered, and that a comprehensive policy is put in place before disaster strikes.

"TK Maxx was an unfortunate target of a well-organised criminal gang, but that fact that it was a victim for almost 18 months suggests that the company had fundamental security weaknesses. Other businesses should learn from this and ensure that customer data is limited to only those places it is absolutely necessary - it's easier to secure a small number of data stores well than to protect many badly.

"What interested me about this case is that the damage to the organisation has been quantified in its quarterly earnings report. TK Maxx's sales were not initially damaged, but over time the full impact of the breach has been assessed, and frankly it is terrifying. While a $256 million price tag is lesson enough, what about the intangible effects on brand reputation? Businesses should be seeing this as the most critical aspect for if customers lose faith in you, what chance of recovery? Suddenly the price of a firewall seems inconsequential.

"I sincerely hope that TJX can bounce back from this, but business should use this as a chilling example of what can happen if security policies are not rigidly enforced and monitored."
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