Class Action And Regulatory Settlements Reflect The Rising Cost Of Data Breaches

As the number of data breaches continues to increase, so too do the costs. After a breach occurs, companies typically expend significant sums conducting investigations, notifying customers and regulators, and engaging in public relations. They incur additional expenses enhancing security and providing identity protection services to victims. And then, of course, there are legal fees, involving both litigation and compliance, which can add up to more than half the total cost of a data breach. These numbers can be substantial, particularly in the context of class actions.

One recent example is health insurance giant Anthem, Inc., which agreed to a class action settlement worth $115 million. The underlying litigation stemmed from a 2015 data breach—one of the largest in the world—in which hackers gained access to Anthem's system and accessed nearly 80 million records that included Social Security numbers, addresses, email addresses, and other personal information.