Zappos Draws Criticism for Data Breach Settlement

Zappos customers who had their data stolen in a 2012 data breach will receive only a meager 10 percent discount to use on the online footwear and apparel retailer's website, as part of a proposed class-action lawsuit settlement. Their lawyers, on the other hand, are set to receive $1,620,000 in attorneys’ fees and other legal costs, according to a preliminary settlement filed last month. The Zappos settlement is not final and is still pending a judge's approval, scheduled for Dec. 20. Following its formal approval by the class-action judge, users will have 60 days to request and use their 10 percent discount.

Total Retail's Take: Yes, you read that right. Customers that had their data stolen from Zappos in a five-year-old breach are getting a coupon code for 10 percent off to shop the very same website. (Not to mention a quick Google search yields similar or better deals available for Zappos.) Doesn't seem like much of a gesture, does it. The surprising part is that it's coming from Zappos, a company that has been lauded time and again for its excellent customer service.

"The revelation that the Amazon.com-owned Zappos may be about to get away with giving customers affected by a severe data breach a 10 percent off coupon is seriously alarming," says Ray Walsh, a digital privacy advocate. "The data breach from 2012 affected 24 million consumers, exposing their names, addresses, passwords, and the last four digits of their credit card numbers. This was a serious mistake, and Zappos should have to face serious consequences. The settlement was submitted for approval to the United States District Court for the District of Nevada in September, and, if approved, it will basically mean that affected customers are being compensated by getting the opportunity to drive sales to Zappos. It's ludicrous! We urge the District Court to denounce this settlement proposal, which basically amounts to a data breach being used as a sales opportunity. If approved this is a really disgusting outcome for the consumers affected.

"Yahoo is currently handing out up to $350 to customers as part of a $117.5 million class-action settlement for data breaches that happened between 2012 and 2016. The idea that consumers could get something directly for their trouble is not an issue, and it's something we should see more. The idea that consumers will need to provide their card details to a business that already let them down, and spend money with that company to utilize that 10 percent discount is insulting. Twenty-four million people were affected, and if all of those people make use of these "reparations" by spending just $1 dollar, Zappos stands to make $21.6 million from a mistake."