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By | John Leyden 20th November 2007 20:32

TJX consumer settlement sale offer draws scorn

Everything must go

Law enforcement officials have poured cold water on plans by TJX to hold a one-day sale for customers as part of a proposed settlement for a consumer class-action case against the security incident-afflicted retailer.

TJX faces consumer and bank class action lawsuits over the exposure of an estimated 45.7m customer records as the result of a security breach that lasted for two distinct six month periods between 2003 and December 2006. Hackers broke into a system that stored data on credit card, debit card, cheque, and return details in an attack blamed on a poorly secured wireless network in one of its stores. Subsequent credit card frauds have being traced to data swiped as a result of these breaches and a number of arrests have been made.

Proposals for a one day sale are among the measures suggested to settle to the consumer class-action lawsuit against TJX. It's unclear if the sale would be restricted to "victims" of the attack or how it would differ from an ordinary clearance sale. TJX itself might conceivably profit from the measure, but the only folks sure to be quids-in are lawyers working on the settlement. By increasing the nominal value of the settlement, the sale would result in an increase to the fees of lawyers working for plaintiffs in the case.

Massachusetts Attorney General Martha Coakley, who is heading a multi-state team of state law officials in a probe against TJX, has criticised the sale proposal in a letter to federal judges overseeing twin-track class-action lawsuits.

"We are unaware of precedent in which a special event, or any type of sale open to the general public, has been deemed a benefit of a class-action settlement and this court should avoid that precedent. We believe this aspect of the proposed settlement demeans the class-action process, which can be used as a meaningful tool to protect consumers," Coakley wrote to US District Court Judge William G. Young, eWeek reports.

Holding a sale as a good will gesture is fine and dandy. But giving it a legal status is of dubious benefits to consumers, Coakley argues.

Although terms for consumer class-action lawsuit still carry the strong whiff of joss sticks and the distant sound of whale song, proposals to settle a class action lawsuit between the off-price retailer and banks are more advanced. Judge Young has ordered parties in that dispute to go into mediation, a move that reportedly implies that banks and TJX are close to agreeing a settlement. ®

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