Evan Schuman writes:
When two Boston-based federal judges sentence Albert Gonzalez Thursday (March 25) and Friday (March 26) for a rash of retail cyber-break-ins that he confessed to orchestrating, the exact sentence may be academic. The key legal argument is shaping up to be this question: “When a retailer is breached, what’s the most reasonable way to determine loss?” The answer is proving to be as baffling—or contradictory–to the federal jurists as it is for most retail CIOs.
The law says the court should define “loss” as “the greatest of actual loss or intended loss.” The government cited a recent appellate court decision as offering yet a third metric: “The First Circuit has held that, in the case of stolen credit cards, intended loss reasonably may be found to be the stolen payment cards’ aggregate credit limit, since it is natural and probable to expect that purchasers of the stolen card numbers will charge as much as possible to them. It is also reasonable to hold a defendant accountable for the amount of loss as measured by the aggregate credit limit, even though the defendant’s personal profit has been dramatically less.”
Defense counselor Martin Weinberg disagreed. He pointed out that “the government’s discussion omits the fact that tens of millions of the accounts had expired and would therefore no longer have had credit limits at all.” He added that “the $500 per access device equation from which this figure is derived is completely arbitrary and lacking in any empirical validation” and that it was “irrational.”
Read more on StorefrontBacktalk.
Not for nothing, but the court documents in the Gonzalez use figures for the TJX breach that do not match what media and web sites such as this one have reported in terms of number of account numbers or records stolen. For example, Weinberg refers to the the TJX breach as capturing 36 million card numbers, not 45 million or 94 million (as the banks had claimed in their lawsuit).