Sony hefting cost of data theft

Hackers continue to sting Sony Corp. much like an aggressive swarm of hornets chasing larger prey. The company said Wednesday that email addresses and phone numbers, but not credit card information, of some 2,000 users of mobile phone venture Sony Ericsson Canada’s website had been compromised. This follows a series of cyber attacks that swiped personal data, including some non-U.S. banking and credit card account details, concerning a combined 100 million users of Sony’s PlayStation Network, Qriocity music and video streaming service and the Sony Online Entertainment gaming network.

The price of coping with data theft is quickly adding up for the company. Sony said in a statement Monday it estimated its costs associated with the spate of breaches to be about $170 million, or 14 billion yen, for its fiscal year ending March 2012. That includes security enhancements, legal costs, identity theft insurance services offered to affected customers and incentive offerings for customers such as free game time, music and videos.

Sony temporarily shutdown the PlayStation Network, Qriocity and Sony Online Entertainment to address the April data breaches then began restoring those online services in May. The company said in a statement that as of Monday it had not received confirmation of identity theft or credit card abuses stemming from the information theft.

Sony faces the dual tasks of improving its information security and reassuring customers. “There’s a huge reputation problem for the company,” said Larry Ponemon, chairman of the Ponemon Institute, said after the April breach. The Ponemon Institute, in Traverse City, Mich., is a research center for information security policy. Ponemon said it is rare for a data breach to compromise more than one million records at a time. “It is a little bit unnerving,” he said.

The data hacking issues come as Sony tries to climb out of the red. On Monday Sony said it would report a net loss of $3.2 billion, or 260 billion yen, for its fiscal year ended March 31, 2011 when it releases its full earnings on Thursday. The company attributed the loss in part to a $4.4 billion, or 360 billion yen, tax charge.

Sony is far from alone as a target for data thieves. Hackers assailed other companies in April as well. With the spread of electronic devices—such as smartphones—that contain personal information, cyber attacks may come from new vantage points in the future. “This problem is only going to get worse because we live in a mobile, connected universe,” Ponemon said.


About Joao-Pierre S. Ruth
New York tech correspondent for Xconomy, tech writer for Investor Uprising, and aspiring urban fantasy writer. I also make brownies and crème brulee.

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