While many small business owners may be acutely aware of the dangers that a data breach can pose for their companies, a recent case involving a massive hacking attack at a smaller grocery chain could underscore the importance of having a sound tech insurance policy in place.
Schnuck Markets, which suffered a data breach that exposed the credit card information of some 2.4 million accounts in 70 stores, is now facing a lawsuit that could cost it as much as $80 million in the state of Illinois alone, according to a report from the St. Louis Business Journal. The suit, filed in late April, could be moved to U.S. District Court from its current venue, St. Clair County Circuit Court.
Overall, Schnucks says that about 1.6 million transactions at stores within Illinois affected about 500,000 accounts, and damages on the accounts for victims there was calculated at about $7.25 per hour, based on an assumption that those people spent about two hours each clearing up the issue, for a total of $7.25 million, the report said. However, plaintiffs say that they should be entitled to about 11 times that amount.
The breach, which resulted from an attack on point-of-sale card readers that allowed criminals to access the information of all cards being swiped using them, went undetected for a period of a few months, beginning on December 9, 2012, until it was noticed and stopped on March 29, 2013, the report said. This suit against the company is the third such case filed since that date, with two more originating in Missouri. In addition, the latter state’s Attorney General is now investigating the way in which the company responded to the breach itself.
Clearly, data breaches can be extremely costly for businesses of all sizes, but smaller companies may be particularly vulnerable because the price tag associated with remediating even smaller incidents can reach into the millions of dollars, significant enough to sink even relatively successful companies with ease. Many simply don’t have the resources to devote to more stringent security measures that might help lessen such risks. As a result, it might be wise for owners to look into small business insurance policies designed specifically to protect them and their enterprises from the potentially massive costs that come when such an incident takes place.