Heartland Security Breach Class Action: Victims $1925, Lawyers $600,000 163
Fluffeh writes "Back in 2007, Heartland had a security breach that resulted in a 130 million credit card details being lifted. A class action suit followed and many thought it would send a direct message to business to ensure proper security measures protecting their clients and customers. With the Heartland case now over and settlements paid out and divided up, the final breakdown is as follows: Class members: $1925 (11 cases out of 290 filed were 'valid'). Lawyers for the plaintiff class action: $606,192. Non-Profits: around $1,000,000 (The Court ruled a minimum of $1 million in payouts). Heartland also paid its own lawyers around $2 million. Eric Goldman (Law Professor) has additional commentary on his Law Blog: 'The opinion indicates Heartland spent $1.5M to advertise the settlement. Thus, it appears they spent over $130,000 to generate each legitimate claim. Surprisingly, the court blithely treats the $1.5M expenditure as a cost of doing business, but I can't wrap my head around it. What an obscene waste of money! Add in the $270k spent on claims administration, and it appears that the parties spent $160k per legitimate claimant. The court isn't bothered by the $270k expenses either, even though that cost about $1k per tendered claim (remember, there were 290 total claims).'"
This is _all_ class action lawsuits! (Score:3, Informative)
Most of them end up with the actual aggrieved getting $20 and the lawyers getting the six-figure payout.
Re:the court should not care about costs... (Score:4, Informative)
I don't know... I think the article summed it up pretty nice:
Actual victims got: $1925
Heartland spent $1.5 million to find the people to give out that $1925.
Somewhere around $998,075 goes to non-profits
The lawyers who brought the lawsuit? They got $606,192.50. For helping 11 people get less than $200 each.
Nice work if you can get it.
Re:the court should not care about costs... (Score:4, Informative)
meh... I don't know... there's a reason the court was ok with awarding $2k to those 11 people.
Fact is, when your credit card is stolen, by law you're limited to paying $50 (and most bank's don't even ask you to pay that). Everything else is recovered from the merchants who accepted the fraudulent charges, and removed from the credit card balance. The bank then replaces the credit card (something Heartland would have been responsible for paying for as part of their merchant agreement).
If your bank removed all of the fraudulent charges, then you do not have a loss. Courts cannot reimburse you for fictional or imaginary losses. Furthermore, this isn't your social security number... when the credit card is replaced, the card number is changed, which means there won't be any additional fraudulent charges.
$2k is probably what those 11 people could prove they were out as a result of the breach.
Re:the court should not care about costs... (Score:5, Informative)
I chased my (previous) bank for three weeks, made numerous phone calls and had to go into a branch twice to get my account re-imbursed the charges
I would suggest changing banks then. I've had my credit card stolen too. I called my bank, they refunded the charge to the card while they investigated, and sent me a letter to sign. Received it a week later, signed it (1 statement, and a checkbox, IIRC), and sent it back. Received a replacement card about the same time. About 6 week later, they sent me a letter saying they finished the investigation, and removed the charge from the account.
I am also quite curious about how you can claim that out of 130,000,000 credit card details that were stolen, a $2,000 settlement to victims who were really "found" is okay.
The lawyers spent $1.5m contacting each of those people asking if they had any losses. 11 is all they could find.
And it isn't like these 130 million people aren't known. After the breach, auditors, forensic investigators come in.. The banks know who each and everyone of these people are. It would have all been disclosed after the breach was discovered.
Re:This is _all_ class action lawsuits! (Score:5, Informative)
What is wrong IMHO is that the lawyers get to put people in the Class by default. You have to specifically sign a document to be removed from the class. Most people just throw those away because they are long and confusing. It would be different if the lawyers had to advertise and convince you to be a part of the class. This could be handled much easier by people taking these companies to small claims court.
Except that it couldn't... The damages for any individual person may be only that $2k... Are you willing to spend two or three weeks producing documents, responding to delaying motions from the other side, attending depositions, arguing in court, filing motions of your own, etc. for $2k? Or, where could you find a lawyer to do that work for you for those weeks for 33% of your $2k compensation?
You can't. Which is why these small suits would almost never (and, prior to class action suits, did never) get filed. And the companies know this - they know if they do something slightly evil and take a few pennies or dollars from each customer, those customers aren't going to spend the time or money to bring suit, so they'll just let it slide... and with enough customers, that company can make millions upon millions. Call it the Superman III tactic.
And incidentally, elsewhere in the comments, people mention the one woman who took Toyota to small claims court over her Prius mileage, and how, since she won, there's no need for lawyers and everyone can do the same thing. What they don't mention is that she was an unemployed lawyer with plenty of time to sit in court.
Re:the court should not care about costs... (Score:5, Informative)
I don't know... I think the article summed it up pretty nice:
Actual victims got: $1925
Heartland spent $1.5 million to find the people to give out that $1925.
Somewhere around $998,075 goes to non-profits
The lawyers who brought the lawsuit? They got $606,192.50. For helping 11 people get less than $200 each.
Nice work if you can get it.
The lawyers who brought the lawsuit got $606k for helping 11 people get $2k and helping nonprofits get $1000k. Oh, and those lawyers spent 5 years doing it. And they had to pay all the costs up front, so don't forget the compound interest. And they have to pay their paralegals, staff, IT guy, rent, etc. for those 5 years. The individual lawyers probably ended up making about $20-30k per year. Not nearly as nice work, unless you can take on five or six of these at once.