Who Holds Companies Accountable? 6 Data Breach Compensation Examples

In today’s digital age, protecting data is vital to ensuring a smooth business, amplifying customer trust and safeguarding their privacy. Beyond financial consequences, data breaches can cause emotional issues, waste time and resources and intrude on privacy. Here’s how organizations handled data breach compensation during some of the worst security challenges.

What Does Data Breach Mean?

A data breach occurs when a suspicious party gains unauthorized access to a group of people’s sensitive and private information. Health care, finance and telecommunication are common industries with frequent data breach attacks. These criminals steal personal details, social security information, health care data and bank details. In some cases, poor data security tools also cause these data to be leaked. 

As technology expands, data breach cases are seeing an exponential rise. In 2023, 3,205 cases of data compromises were recorded in the U.S., an increase from 1.802 cases the year before. Overall, more than 353 million people were affected by data breaches that year, an increase from 281.5 million people recorded in 2021. Corporations worldwide have been under scrutiny in recent years due to data breach attacks and have also paid hefty fines as compensation.

Data Breach Compensation Examples

Many corporations are becoming victims of extravagant data breach incidents that result in millions of dollars in compensation. Among them are:

1. Meta’s Data Transfer Compensation

In 2020, Ireland’s Data Protection Commission (DPC) investigated Meta Platform Ireland Limited for transferring personal data from Facebook from the European Economic Area to the U.S. without ensuring sufficient data privacy protocols. DPC said Meta Ireland violated Article 46(1) of the General Data Protection Regulation (GDPR).

Last year, the investigation concluded the inquiry and found Meta guilty. DPC ordered Meta to pay $1.3 billion as compensation for the violation. 

2. Instagram’s Children’s Data Privacy Violation 

Instagram, another product of Meta, also faced investigation when the contact details of minors were leaked to the public when users upgraded their accounts to business profiles. The leak happened when the users accessed tools like profile visits and were not informed that their data would become public. 

DPC investigated the matter under GDPR and fined Meta $403 million in 2022. This was one of the largest fines DPC has given for a GDPR breach. 

3. Equifax’s Failure to Fix Unpatched Framework

Equifax had an erroneous framework in one of its systems. Despite issuing the error for months, the company did not fix the problem. This caused a data breach with the company losing sensitive personal and financial details of about 150 million people in 2017. Equifax also kept the breach private for weeks after the cyberattack was discovered.

The agency consented to pay $425 million in a settlement with various parties, including the Federal Trade Commission, the Consumer Financial Protection Bureau (CFPB) and 50 U.S. states and territories. Equifax was also required to add $125 million for consumer compensation if the initial value is inadequate and conduct third-party checking for its security programs biennially.

The attack made Equifax spend about $1.4 billion improving its security and Moody reducing its rating. 

4. Home Depot’s Point-of-Sale Data Breach

Home Depot became a victim of a large-scale breach involving its point-of-sale (POS) system, causing 40 million credit card numbers and 52 million email details stolen in 2014. 

The hackers entered the company’s network using a vendor’s login details and installed malware to collect data. The attack affected people who used the self-checkout sections at Home Depot’s U.S. and Canadian branches from April to September 2014.

Following the attack, the company paid upwards of $198 million to banks and credit card issuers. In addition, it settled a multi-state investigation into the matter for $17.5 million in 2020.

5. T-Mobile’s Data Leakage to Cybercriminal Forum

In 2021, T-Mobile was involved in a data breach class action lawsuit when unauthorized access caused the data of 77 million people to be listed on a cybercriminal forum.

This caused the mobile communications company to pay a total of $350 million as compensation. The payments were made on claims by class members as plaintiffs’ charges and settlement administration costs. 

In addition, the company also spent about $150 million on data safety technology in 2022 and 2023. 

6. Amazon’s Non-Consensual and Non-Compliant Data Processing

In 2021, Amazon, which is not a stranger to data breach attacks, received a fine of about $887 million from Luxembourg’s data regulators for its poor personal data processing system for advertising-related matters that did not comply with the GDPR practices.

The fine remains one of the highest ever imposed in GDPR’s six-year history. The company has appealed the decision, accusing the Luxembourg regulator of acting on baseless allegations and saying that no data leakage happened and no personal information was exposed. 

Can I Sue for a Data Breach?

The simple answer is yes. However, it also depends on the nature of the attack, the company’s conduct and whether they have already offered to discuss compensation.

According to the law, a company that has had data breach attacks must inform its users about the nature of the attacks and the actions taken to rectify the situation. If you are affected, ensure you have received all the information clearly and comprehensively. 

The company must advise users on what to do next and report any theft issues to the relevant authorities. For example, social security numbers can be used to commit tax fraud, and personal details can be employed to commit identity theft. 

If the information received is incomplete or non-existent, you can file an official complaint with the company and outline your mental or financial distress. Also, ensure to list the compensation you expect to receive.

If you are unhappy with the company’s conduct or feel that the amount of compensation is unjustified, you can file a civil lawsuit against the company with the help of a legal attorney. Remember to have all letters, complaints and documents in hand to ensure your case is backed up by solid evidence. 

Data Security is Paramount to Ensure Customer Privacy

Cyberattacks are becoming the norm, causing various consequences and distress to customers and companies alike. Corporations must prioritize having resilient, sound and comprehensive data security systems and methods to protect their customers’ personal details.