While Target (NYSE: TGT) executives would love to be able to pin the retailer's massive card data breach on IT vendors, it may not be able to do so.
Soon after two major banks filed suit against Target and Trustwave Holdings Inc., a credit-card security firm, Trustwave said it was not involved in the massive data breach last November. In fact, Trustwave does not process cardholder data or handle Target's data security, according to Trustwave CEO Robert McCullen.
"Contrary to the misstated allegations in the plaintiffs' complaints, Target did not outsource its data security or IT obligations to Trustwave," McCullen wrote in a letter on the company's Web site.
Target and Trustwave were sued for $5 million in damages in the class-action lawsuit brought by Trustmark National Bank, New York, and Green Bank, Houston. Target and Trustwave failed to stop the theft of 40 million payment card details and 70 million other personal records, according to the suit.
However, Trustmark National Bank withdrew from the class action suit on March 28, filing a notice of dismissal of its claims on Friday in U.S. District Court for the Northern District of Illinois. Trustmark executives must be concerned about their chances of successfully litigating against Target.
While the Trustmark withdrawal may be a temporary reprieve for Target, we expect much more legal action against Target and the obvious loss of shopper respect and business.
In fact, 60 percent of U.S. shoppers who are aware of data breaches blame retailers for the incidents, according to a study conducted by Harris Poll on behalf of Feedzai in January 2014.
Among U.S. adults who are aware of any data breaches, 60 percent believe merchants are responsible for preventing future incidents, while 13 percent think responsibility falls on banks.
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