In March, Home Depot agreed to resolve a class action brought by financial institutions following the 2014 data breach that compromised nearly 56 million credit and debit card numbers. As part of the settlement, Home Depot agreed to pay $25 million and promised to strengthen data security to reduce the risk of a future data breach.
The financial institutions alleged that the breach was “the inevitable result” of Home Depot’s lackluster data-security practices “characterized by neglect, incompetence and an overarching desire to minimize costs.” The Home Depot data breach occurred not long after a similar breach at Target, and the financial institutions alleged that Home Depot ignored red flags, warnings and industry standards. Home Depot filed a motion to dismiss the financial institutions’ claims, but the Northern District of Georgia denied the motion and allowed the majority of the claims to proceed.
According to the proposed settlement, Home Depot will pay $25 million into a non-revisionary fund to be distributed to financial institutions that have not released their claims against Home Depot for the 2014 breach. Home Depot also agreed to spend $2.25 million to compensate entities whose claims were released after receiving misleading information in connection with MasterCard’s ADC program, and separately pay for the cost of notice, administration, and attorneys’ fees and expenses. Further, Home Depot agreed to strengthen security measures including implementing safeguards to manage risk and an appropriate industry recognized security control framework.
Financial institutions can receive a fixed payment of $2 per compromised card without needing to submit documentation of losses; however, those who submit documentation of losses are also eligible to receive a supplemental award of up to 60 percent of their uncompensated losses. Class representatives will also apply for service awards of up to $2500 for each class representative, which Home Depot agreed not to oppose.
Dee Miles, who heads up our firm’s Consumer Fraud and Commercial Litigation Section, was appointed to the Plaintiffs’ Steering Committee for Home Depot multidistrict litigation concerning the data breach in 2015. Dee says:
This is very important litigation that exposes the critical flaws in the way credit and debit card systems operate in the United States. Because Home Depot failed to maintain adequate computer data security, it exposed millions of people to the risk of fraud and identity theft, and violated their privacy rights. Unless something is fundamentally changed, consumers will continue to be at risk.
If you need more information, contact Dee Miles or Leslie Pescia (also a lawyer in the Section) at 800-898-2034 or by email at Dee.Miles@beasleyallen.com or Leslie.Pescia@beasleyallen.com.
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