AG Alan Wilson Joins $1.5M Settlement with Retailer Neiman Marcus over 2013 Data Breach

(COLUMBIA, S.C.) - Jan. 8, 2019 - The Neiman Marcus Group LLC has agreed to pay $1.5 million and implement a number of policies to resolve an investigation with 43 states and the District of Columbia into the 2013 breach of customer payment card data at 77 Neiman Marcus stores in the United States, Attorney General Alan Wilson said today.

In January 2014, Neiman Marcus disclosed that payment card data collected at certain of its retail stores had been compromised by an unknown third party. The states' investigation determined that approximately 370,000 payment cards – 1,309 of which were associated with South Carolina consumers – were compromised in the breach, which took place over the course of several months in 2013. At least 9,200 of the payment cards compromised in the breach were used fraudulently.

“Consumers are entitled to have their privacy protected and safeguards against fraud not compromised,” Attorney General Wilson said. “The message to these companies is: protect your customers.”

South Carolina’s share of the settlement funds is $24,637.30, which goes to the state. There are no reports that any South Carolina customers lost money.

In addition to the monetary settlement, Neiman Marcus has agreed to a number of injunctive provisions aimed at preventing similar breaches in the future, including:

• Complying with Payment Card Industry Data Security Standard (PCI DSS) requirements;
• Maintaining an appropriate system to collect and monitor its network activity, and ensuring logs are regularly reviewed and monitored;
• Maintaining working agreements with two, separate, qualified Payment Card Industry forensic investigators;
• Updating all software associated with maintaining and safeguarding personal information, and creating written plans for replacement or maintenance of software that is reaching its end-of-life or end-of-support date;
• Implementing appropriate steps to review industry-accepted payment security technologies relevant to the company's business; and
• Devaluing payment card information, using technologies like encryption and tokenization, to obfuscate payment card data.

Under the settlement, Neiman Marcus is also required to retain a third-party professional to conduct an information security assessment and report, and to detail any corrective actions that the company may have taken or plans to take as a result of the third-party report.