Projected cost of Epsilon breach jumps to $4 billion

CyberFactors reports jump in data breach costs

The ultimate fee for the data breach last month at email service provider Epsilon could reach as high as $4 billion, depending on what becomes of the data that was stolen, according to a cyber-risk advisory firm.

This sum includes costs to Epsilon, its customers and the individuals whose email addresses were stolen, according to a report by CyberFactors.

MORE ON SECURITY: The Sony PlayStation breach notification letter that broke 77 million hearts

That figure could be reached if criminals get hold of the email addresses and successfully exploit them to gather more personal information and carry out a spear-phishing blitz, according to the report. "However, until such an event takes place and can be directly linked back to this specific breach, the estimate remains theoretical, but certainly possible given the multitude of sites that use email addresses as user IDs," the report says.

The firm's more conservative estimate for the cost of the March 30 breach is $637.5 million. That's in stark contrast to the estimate given by Ed Heffernan, the president and CEO of Epsilon's parent company, Alliance Data Systems. He projected no "meaningful" costs or liability related to the incident and that the "vast, vast majority, if not all," of Epsilon's clients would stick with the company.

But CyberFactors says it is more likely that Epsilon will lose some current customers and lose the business of potential future customers who are scared away by news of the breach.

Costs to Epsilon's customers could be $5.5 million each for notification of their customers about the theft, settlements to those customers, legal defense, compliance adjustments and loss of business, the report says.

Epsilon's costs will include all of those factors plus a forensic investigation into how the breach happened, regulatory investigations and fines, CyberFactors says.

Typically with breaches, these costs come stumbling in over several years, with about 51% being realized in the first year and 42.2% in the second year, with the remaining 6.8% coming in at three years or later, the report says.

If Epsilon does lose customers because of the breach -- this would be measured by abnormal churn among the customer base -- lost revenues would range from $6.1 million if 1% are lost, to $30.6 million if 5% are lost, the report says.

CyberFactors assumes in its figures that the Epsilon customers whose data was breached had roughly equal numbers of emails compromised.

Read more about wide area network in Network World's Wide Area Network section.

Join the newsletter!

Or
Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags securityprivacycybercrimelegalsonydata breachencryptionEpsilonAlliance Data Systems

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Tim Greene

Network World
Show Comments

Essentials

James Cook University - Master of Data Science Online Course

Learn more >

Mobile

Exec

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?