The Target Data Breach Has Cost Banks $240 Million ... So Far
The Target data breach has caused a lot of headaches — it has also been crazy expensive.
A new report from the Consumer Bankers Association estimates the cost of replacing the credit and debit cards compromised in the breach has exceeded $200 million. That’s just card-replacement costs reported by the CBA and the Credit Union National Association. Factor in the impact of fraudulent activity and costs to financial institutions not members of the CBA or CUNA, and the price tag on the Target data breach gets a lot higher.
Cards replaced by the associations account for about half of affected cards — 21.8 million out of 40 million cards.
The Independent Community Bankers Association also released a cost assessment Feb. 19. The nation’s community banks have replaced 4 million debit and credit cards so far, according to a news release, costing those institutions about $40 million.
Those associations’ members represent the majority of the country’s consumer financial service providers, and while the $240 million in replacement expenses doesn’t come directly out of consumers’ pockets, it doesn’t come out of Target’s, either. Banks are re-issuing cards at their own expense.
“The only part that Target may at some point be on the hook for is any fraud associated with these cards,” said Tom Crosson of the Consumer Bankers Association. “Obviously, this is not something that they (banks) want to see happen, but banks are heavily regulated and have plans in place to deal with situations like this.”
Given the frequency of data breaches these days, it would seem the millions spent on card replacement after the Target breach could become a more regular expense, but Crosson said this was an exceptional event because of its size. The last time banks had to deal with something on this scale was probably the T.J. Maxx breach in 2007.
If you’re worried about the Target data breach exposing you to identity theft, you should monitor your credit and debit card accounts on a regular basis for fraudulent activity. In addition, you can monitor your credit for free using the Credit Report Card, a free tool that updates two of your credit scores monthly. Any major, unexpected changes in your score could signal identity theft and you should pull your credit reports immediately to check for signs of fraud (you can do this for free once a year at each of the major credit bureaus).
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