AG Brnovich Announces Data-Breach Settlement with Retailer Neiman Marcus

PHOENIX -- Attorney General Mark Brnovich announced today that The Neiman Marcus Group LLC has agreed to pay $1.5 million and implement a number of policies to resolve an investigation by 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.

In January 2014, Neiman Marcus disclosed payment card data, collected at certain retail stores, had been compromised by an unknown third party. The states' investigation determined approximately 370,000 payment cards – 5,922 of which were associated with Arizona 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.

“When consumers use credit or debit cards, they should be able to trust that businesses are treating their sensitive data appropriately and in accordance with clearly disclosed policies,” Attorney General Brnovich said. “This settlement reinforces that principle and sends a message to other retailers that they need to protect customers' information.”

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.
  • 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.

Arizona’s share of the settlement funds is $28,768.05. The funds will be deposited into the Attorney General’s Office Consumer Revolving Fund to be used for future consumer enforcement actions.

Assistant Attorney General Bryce Clark handled the investigation for Arizona.