Breach, Data Security

Sony to shell out $15M in PSN breach settlement

Sony has agreed to a $15 million preliminary settlement in hopes of quashing even heftier costs associated with its massive PlayStation Network hack three years ago.

On Thursday, the electronics giant released an official statement on the settlement, just a day after gaming site Polygon broke the news.

In a written statement to Polygon, a Sony spokesperson said that the settlement was still “subject to final approval by the Court,” but that the company had reached the agreement  to “avoid the costs associated with lengthy litigation" with class-action plaintiffs.

The lawsuits stem from an April 2011 incident, where hackers compromised Sony's PlayStation Network (PSN), its on-demand service Qriocity and gaming portal Sony Online Entertainment, exposing the personal data of roughly 77 million users. Court documents (PDF) filed June 16 in a United States District Court in San Diego detailed the agreement.

Of note, up to $4 million was set aside for claimants who participated in Sony's “Welcome Back” package, a free game promotion set up right after the PSN compromise. On a “first-come, first-served basis,” impacted customers can claim additional games and services offered through Sony, court documents said. Users who did not participate in the 2011 “Welcome Back” promotion can also take advantage of similar free offerings, which have been capped at $6 million in claims.

Furthermore, court documents revealed that up to $1 million was set aside for identity theft reimbursements as a result of the breach, and that Sony would pay up to $2.75 million in attorney's fees (in addition to the $15 million set aside for the settlement).

The settlement agreement comes five months after Zurich, Sony's insurer, was deemed not liable for lawsuit costs associated with the 2011 breach.

Zurich American Insurance Co. and Sony had been embroiled in an ongoing lawsuit for years, as the insurer sought immunity from covering Sony. In February, a New York trial court judge ruled that Zurich was not responsible to come to Sony's aid for more than 50 class-action complaints filed against the company.

In the case, Zurich argued that Sony's policy only covered claims for bodily injury, property damage or personal and advertising injury.

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