Ameritrade Reaches Second Data Breach Settlement

Millions of current and former TD Ameritrade customers whose personal information may have been stolen in 2007 may be eligible to receive as much as $2,500 under a new proposed class action lawsuit settlement agreement.

This is the company’s second attempt at resolving the class action lawsuit, which was filed after Ameritrade disclosed in September 2007 that it had suffered a data breach earlier in the year. It is believed that anyone who held an Ameritrade account or provided an email address to the company before the data breach may have had their email address, home address as well as information about their account activity exposed to hackers. Social Security Numbers, user names and passwords were not compromised, according to TD Ameritrade’s investigation into the matter. The Ameritrade data breach, which occurred sometime in early 2007, was only discovered after Ameritrade customers started receiving investment-related SPAM emails.

The new proposed Ameritrade data breach settlement will cost Ameritrade between $2.5 million and $6.5 million. A U.S. District judge rejected the company’s first class action settlement, which offered only anti-spam software and a promise of tighter security, on the grounds it didn’t do enough to benefit the Ameritrade customers affected by the data breach.

Under the newly proposed Ameritrade settlement, it’s unclear how many of the 6.2 million TD Ameritrade customers affected by the data breach will be able to collect any settlement benefits because the payments will only be offered to victims of identity theft resulting from the breach. Class members who suffered identity theft will receive between $50 and $2,500 if the new settlement is approved. They will not have to prove their identity theft problems were related to the Ameritrade data breach; they just have to prove they were Ameritrade customers and suffered ID theft from an unknown cause.

UPDATE: A Fairness Hearing on the new Ameritrade Data Breach Class Action Lawsuit Settlement will be held April 7, 2011. You can find more information on how to claim money from this class action settlement at www.AccountDataSettlement.com.