On a conference call with investors, Heartland chief executive Robert Carr explained that the firm had taken the hit in this quarter in “expenses and accruals” resulting from the breach.
“The smaller part of these intrusion-related expenses represents legal and other expenses related to the intrusion and less then US$1 million related to fines assessed by Visa against our sponsor banks, which fines our sponsor banks are contesting,” he said.
“More than 50 per cent of this expense, however, relates to a fine that MasterCard assessed against our sponsor banks ostensibly because of an alleged failure by Heartland to take appropriate action upon having learned that its computer system may have been breached and upon thereafter having discovered the intrusion.”
However, Carr said the firm would be contesting the MasterCard fine as unfair, and told Heartland’s sponsor banks to do the same.
With the legal costs of this case still racking up, therefore, the news should stand as a cautionary tale for firms who take data security and compliance with the Payment Card Industry Data Security Standard (PCI DSS) lightly.
Although the legal costs and fines - as well as the cost of being recertified as PCI compliant - are easily quantifiable, the damage to a firm’s brand and reputation is likely to be both greater and more significant.
“We are in a cyber crimes arms race, and we need to stay ahead of the bad guys who never rest and do not call committee meetings to update their malicious tools and attack vectors,” said Carr.
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