Home Depot to pay out $26m in data breach settlement

US retailer Home Depot agreed to pay at least US$19.5 million (A$26.1 million) to compensate consumers harmed by a 2014 data breach affecting more than 50 million cardholders.

The home improvement retailer will set up a US$13 million fund to reimburse shoppers for out-of-pocket losses, and spend at least US$6.5 million to fund 1-1/2 years of cardholder identity protection services.

Home Depot also agreed to improve data security over a two-year period, and hire a chief information security officer to oversee its progress. It will separately pay legal fees and related costs for affected consumers.

Terms of the preliminary settlement were disclosed in papers filed today with the federal court in Atlanta, where Home Depot is based.

Home Depot did not admit wrongdoing or liability in agreeing to settle. The settlement requires court approval.

"We wanted to put the litigation behind us, and this was the most expeditious path," spokesman Stephen Holmes said. "Customers were never responsible for any fraudulent charges."

Home Depot has said the breach affected people who used payment cards on its self-checkout terminals in US and Canadian stores between April and September 2014.

It has said the intruder used a vendor's user name and password to infiltrate its computer network, and used custom-built malware to access shoppers' payment card information.

The accord covers about 40 million people who had payment card data stolen, and 52 million to 53 million people who had email addresses stolen, with some overlap between the groups.

Home Depot said it has booked US$161 million of pre-tax expenses for the breach, including for the consumer settlement, and after accounting for expected insurance proceeds.

Lawyers for the consumers said the accord compares "favorably" with other data breach class actions, including Target's US$10 million settlement over a 2013 data breach that compromised at least 40 million cards.

Legal fees and costs for the lawyers could top US$8.7 million, court papers showed.

At least 57 proposed class action lawsuits were filed in US and Canadian courts over the data breach.