Home Depot Says 56 Million Cards at Risk, Malware Eliminated, Encryption in Place

Sept. 19 — In what may be the largest reported payment card breach, Home Depot Inc. has eliminated the malware infection that compromised some 56 million payment cards and has completed new point-of-sale encryption installation at all of its stores in the U.S. and Canada, the world's largest home improvement retailer said in a Sept. 18 statement.

When Home Depot Sept. 8 first confirmed that its networks had been breached, it didn't provide an estimate of how many payment cards might have been affected.

The 56 million card figure outstrips the 40 million payment cards that retailer Target Corp. said were affected when, in December 2013, it revealed a hacking breach of its computer network.

House lawmakers recently joined the list of legislators and regulators conducting investigations of the Home Depot breach.

$62 Million for Breach Expenses

Home Depot estimates that it will spend $62 million for costs related to responding to the data breach, according to a Sept. 8 Form 8-K filing with the Securities and Exchange Commission.

The Home Depot, however, estimated in the filing that $27 million of those costs will be reimbursable by its insurers.

Form 8-K filings are required when publicly traded companies face “unscheduled material events or corporate changes,” according to the SEC.

Large Card Breaches Not New

In 2005, a credit card security hacking incident at Card Systems Solutions Inc. affected 40 million cards.

The Card Systems breach was reported June 17, 2005, just days before the June 30 deadline for credit card information processors to verify their compliance with the Payment Card Industry Data Security Standard adopted in 2004.

In March 2007, TJX Companies Inc. confirmed that a hacking incident it revealed in January 2007 without estimated the number of cards at risk had affected at least 46.2 million credit and debit cards.

Those breaches helped speed the move by states to adopt data breach notification laws, which are now in 47 states and the District of Columbia.

Despite periodic interest from federal lawmakers—which predictably rises after another large data breach is revealed—Congress hasn't passed a data breach notice standard to preempt the patchwork of state laws, and there is almost no chance it will do so before the end of the 113th Congress in January 2015.

Full text of Home Depot's Form 8-K filing with the SEC is available at http://op.bna.com/pl.nsf/r?Open=dapn-9p4l9z.