The Fallout from a Data Breach

Los Angeles, CAThe fallout from a data breach can be massive in scope, as evidenced by the millions of people affected when their personal information is illegally accessed. Some cases involve stolen card numbers and consumers who allege their credit cards were used illegally. But other cases involve identity theft, where consumers don’t find out until later that their information has been used to make big purchases or access large sums of money. The problem, data breach lawsuits allege, is that companies simply don’t take protection of customer information seriously.

In the past few years, many high-profile lawsuits have been filed concerning data breaches at national companies. How high profile? Companies including Target, Home Depot and Michaels have all been accused of failing to protect consumer information. But it’s not just retail companies that face claims. Universities, financial institutions, insurance companies and health care providers have also faced lawsuits linked to data breaches.

When information including Social Security numbers, date of birth and medical information is taken, thieves can file false tax returns and take out a mortgage in the victim’s name, putting the victim at risk of having his or her credit rating ruined. Even when the breach is uncovered in time, victims must spend their own time setting things right, notifying the proper people and organizations, and canceling cards.

Worse still is when companies are warned that their security systems aren’t up to snuff, but fail to take appropriate action, creating ideal circumstances for a hacker to take advantage of the situation. Some companies are accused of knowing about a data breach for too long before notifying consumers that their information was made vulnerable.

Perhaps the most egregious breach is that of SanrioTown.com, an online community for people who love Hello Kitty. According to The Guardian (12/21/15), the breach allegedly exposed members’ first and last names, birth dates, genders, countries, e-mail addresses, some passwords, and password questions and answers. Sanrio has not commented on the alleged leak.

Companies who fail to adequately protect consumer, employee or client information can face lawsuits to recover damages sustained as a result of negligence. They may also face fines or other sanctions from regulators and lawsuits from shareholders.

Recently, data breach lawsuits have been settled, including a proposed $10 million settlement in the Target data breach lawsuit.