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 PC World newsletter!

Error: Please check your email address.

Tags Alliance Data Systemssecuritylegaldata breachEpsilonencryptionsonyprivacycybercrime

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

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

Tim Greene

Network World
Show Comments

Cool Tech

D-Link PowerLine AV2 2000 Gigabit Network Kit

Learn more >

Xiro Drone Xplorer V -3 Axis Gimbal & 1080p Full HD 14MP Camera

Learn more >

Crucial® BX200 SATA 2.5” 7mm (with 9.5mm adapter) Internal Solid State Drive

Learn more >

D-Link TAIPAN AC3200 Ultra Wi-Fi Modem Router (DSL-4320L)

Learn more >

ASUS ROG Swift PG279Q – Reign beyond virtual world

Learn more >

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Gadgets & Things

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >


Learn more >

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Family Friendly

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >

ASUS VivoPC VM62 - Incredibly Powerful, Unbelievably Small

Learn more >

Stocking Stuffer

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Lexar Professional 2000x SDHC™/SDXC™ UHS-II cards

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Best Deals on PC World

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.


Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?