Home Depot settles consumer lawsuit over big 2014 data breach

Home Depot Breach Puts 56 Million Credit Cards At Risk

(Reuters) -- Home Depot Inc agreed to pay at least $19.5 million to compensate U.S. consumers harmed by a 2014 data breach affecting more than 50 million cardholders.

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The home improvement retailer will set up a $13 million fund to reimburse shoppers for out-of-pocket losses, and spend at least $6.5 million to fund 1-1/2 years of cardholder identity protection services.

It will separately pay legal fees and related costs for affected consumers.

Terms of the preliminary settlement were disclosed in papers filed on Monday with the federal court in Atlanta, where Home Depot is based.

Home Depot did not admit wrongdoing or liability in agreeing to settle. The settlement requires court approval.

"We wanted to put the litigation behind us, and this was the most expeditious path," spokesman Stephen Holmes said. "Customers were never responsible for any fraudulent charges."

Home Depot has said the breach affected people who used payment cards on its self-checkout terminals in U.S. and Canadian stores between April and September 2014.

It has said the intruder used a vendor's user name and password to infiltrate its computer network, and used custom-built malware to access shoppers' payment card information.

The accord covers about 40 million people who had payment card data stolen, and 52 million to 53 million people who had email addresses stolen, with some overlap between the groups.

Home Depot said it has booked $161 million of pre-tax expenses for the breach, including for the consumer settlement, and after accounting for expected insurance proceeds.

Lawyers for the consumers said the accord compares "favorably" with other data breach class actions, including Target Corp's $10 million settlement over a 2013 data breach that compromised at least 40 million cards.

Legal fees and costs for the lawyers could top $8.7 million, court papers showed.

At least 57 proposed class action lawsuits were filed in U.S. and Canadian courts over the data breach. The U.S. cases were consolidated in the Atlanta court.

The case is In re: Home Depot Inc Customer Data Security Breach Litigation, U.S. District Court, Northern District of Georgia, No. 14-md-02583.

RELATED: Other notable data breaches

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Home Depot settles consumer lawsuit over big 2014 data breach
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Katherine Archuleta, director of the U.S. Office of Personnel Management (OPM), speaks during a House Oversight and Government Reform Committee hearing on the OPM data breach in Washington, D.C., U.S., on Wednesday, June 24, 2015. U.S. senators said yesterday they doubt the government's personnel office understands the breadth of a computer hack that exposed the records of more than 4 million federal workers, or that the agency can stop another breach. Photographer: Andrew Harrer/Bloomberg via Getty Images
WASHINGTON, DC - JUNE 05: The entrance to the Theodore Roosevelt Federal Building that houses the Office of Personnel Management headquarters is shown June 5, 2015 in Washington, DC. U.S. investigators have said that at least four million current and former federal employees might have had their personal information stolen by Chinese hackers. (Photo by Mark Wilson/Getty Images)
SCHAUMBURG, IL - AUGUST 04: A statue of a horse stands at the entrance to a P.F. Chang's restaurant on August 4, 2014 in Schaumburg, Illinois. P.F. Chang's China Bistro Ltd. said today that the company experienced a data breach involving customers' credit and debit card information which affected 33 restaurants in 16 states, including the Schaumburg, Illinois location. (Photo by Scott Olson/Getty Images)
PORTLAND, ME - AUGUST 15: Shaws on Congress Street on Friday, July 15, 2014. Shaws parent company is investigating a possible data breach. (Photo by Logan Werlinger/Portland Press Herald via Getty Images)
COLMA, CA - APRIL 18: Customers enter a Michaels art and crafts store on April 18, 2014 in Colma, California. Michaels, the largest arts and crafts chain in the U.S., announced that an estimated 2.6 million cards used at its stores across the country may have been affected by a security breach. Aaron Brothers, a subsidiary of Michaels, was also affected by the breach. (Photo by Justin Sullivan/Getty Images)
CORAL GABLES, FL - FEBRUARY 28: A checkout keypad is seen at a Sears store on February 28, 2014 in Coral Gables, Florida. According to reports the U.S. Secret Service is investigating a possible digital attack at Sears Holdings Corp. (Photo by Joe Raedle/Getty Images)
A couple of shoppers leave a Target store on a rainy afternoon in Alhambra, California on December19, 2013, as the US retail giant said some 40 million customers may have had bank card data compromised by hackers who broke into its database as holiday shopping got underway. Target said there had been 'unauthorized access' to its payment system in US stores affecting credit and debit cards with approximately 40 million credit and debit cards possibly affected by the breach between November 27 and December 15, the company said in a statement. AFP PHOTO / Frederic J. Brown (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
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