Home Depot spent $43 million on data breach in just one quarter

The retailer expects 'significant' ongoing expenses from the breach

Home Depot spent US$43 million in its third quarter dealing with the fallout of one of the largest ever data breaches, highlighting the costly nature of security failures.

The retailer said in a regulatory filing on Tuesday that it expects $15 million of that cost will be reimbursed by a $100 million network security and privacy liability insurance policy.

The $43 million was spent on investigations, providing identity theft protection services to consumers, increased call center staffing and other legal and professional services.

Attackers stole 56 million payment card details and collected 53 million email addresses of people who shopped at Home Depot's stores between April and September in the U.S. and Canada. They gained access to Home Depot's network by using the login credentials of one of the retailer's vendors.

The retailer warned that it expects "to incur significant legal and other professional services expenses associated with the data breach in future periods."

Home Depot is also facing 44 actions filed in courts in the U.S. and Canada. It expects more claims may be filed on behalf of customers, payment card brands, payment card issuing banks and shareholders.

Payment card networks may make claims seeking to recover incremental counterfeit fraud losses and costs for reissuing cards, Home Depot wrote. Its liability will depend on whether it was noncompliant with data security standards, which contributed to the breach.

An independent auditor found that its network which handles payment card data was compliant with data security standards in the fall of 2013, Home Depot wrote. But it was undergoing certification for 2014 when the data breach occurred, it said.

"The forensic investigator working on behalf of the payment card networks may claim the company was not in compliance with those standards at the time of the data breach," Home Depot wrote.

Retailers are required to follow the Payment Card Industry's Data Security Standards (PCI-DSS), which are a set of guidelines for securing card data. If found noncompliant, a business can face liability.

The PCI Security Standards Council has been warning retailers that passing an annual audit may not be sufficient and that compliance monitoring should be an ongoing project. Network changes, it has said, could mean a business can fall out of compliance.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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