Capital One to Pay $80M Penalty Over Data Breach Incident

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Capital One Financial COF has agreed to pay $80 million in fine to U.S. banking regulator over a data breach incident that occurred last year. The cyberattack exposed personal information of 106 million credit card holders of the bank in the United States and Canada. In the consent order, the […]

Capital One Financial COF has agreed to pay $80 million in fine to U.S. banking regulator over a data breach incident that occurred last year. The cyberattack exposed personal information of 106 million credit card holders of the bank in the United States and Canada.

In the consent order, the Office of the Comptroller of the Currency (OCC) stated that Capital One did not “establish effective risk assessment processes prior to migrating significant information technology operations to the public cloud environment.” The OCC also noted that even after concerns related to cyber security were raised during an internal audit, the top management didn’t take proper action.

Under the terms of the OCC order, Capital One is required to take adequate steps to ensure that its computer system has sufficient security and submit the plans for review. The company faces a similar oversight from the Federal Reserve.

Capital One in a statement said, “Safeguarding our customers’ information is essential to our role as a financial institution. In the year since the incident, we have invested significant additional resources into further strengthening our cyber defenses, and have made substantial progress in addressing the requirements of these orders.”

The cyberattack — one of the largest data breach incidents in the recent past — on Capital One’s system compromised nearly 140,000 Social Security numbers and 80,000 bank account numbers. Earlier in 2017, Equifax Inc. EFX revealed that personal information of 147 million people was stolen following a cyberattack. For this, it had to pay a fine of $700 million to the regulators.

Several banks and other financial service providers have been using cloud solutions offered by tech giants including Microsoft MSFT, Amazon AMZN and Google. The cloud service allows firms to access server capacity as and when needed, making it more efficient than running their own sites.

Shares of Capital One has lost 27.8% over the past year compared with 26.7% decline for the industry.

Currently, the company carries a Zacks Rank #4 (Sell).

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