14173 Thu, 04/03/2008 - 11:50am
FRAMINGHAM, Mass.–The TJX Cos. will allocate up to $24 million for banks and other financial institutions whose MasterCard accounts were stolen when hackers broke into the retailer’s computers in 2006.
Under an agreement with MasterCard International, the giant credit card company will use the money to make “alternative recovery offers” to various banks worldwide that issue the cards that were compromised by the break-in. Many of those banks, who have had to reissue tens of millions of new cards at significant expense, have sued TJX for compensation.
The agreement, similar to one reached with Visa last year, will obligate participating banks to forego legal claims. Specifically, banks accepting the offers will agree to “release and indemnify TJX and its acquiring banks with respect to claims of such issuers,” including claims in class-action lawsuits in Massachusetts and federal courts, according to a TJX statement.
However, the agreement itself is dependent on at least 90 percent of the accounts accepting the offers by May 2.
The discount retailer also said that costs of the agreement will be covered under a reserve fund that it established and disclosed during the previous fiscal year.
Carol Meyerowitz, president and chief executive officer of TJX, said the firm looks forward to “a high level of issuer acceptance.” She added that the retailer has overhauled its security system at a cost of “many millions of dollars.”