Revealed: World's largest security breach

TJX Companies said 45.7 million accounts were compromised over nearly a two-year period, in an update of an investigation into a data breach of customer records.

The scope of the breach, which was initially disclosed in January, is far wider than previously believed.

Avivah Litan, an analyst with research company Gartner, said: "This is the largest security breach we've ever had worldwide. There was a case at CardSystems where 40 million records were exposed but this one looks like it was a case where the information was stolen."

TJX, which operates discount retail chains including TK Maxx in the UK and Marshalls and TJ Maxx in the US, released additional details of the breach in a filing with the US Securities and Exchange Commission.

In its filing, TJX noted cyber thieves first accessed its computer systems in July 2005 and installed software to harvest such sensitive customer information as account information, names and addresses, drivers' licence numbers and military and state identification. The breach continued until mid-January 2007.

Accounts and transactions affected included credit and debit card transactions, as well as checks and returned merchandise without receipts at the company's AJ Wright, HomeGoods, Marshalls and TJ Maxx stores in the US and Puerto Rico. Credit card transactions at TJX's HomeSense and Winners stores in Canada, as well as credit and debit card transactions at its TK Maxx stores in Ireland and the UK.

TJX rang up a pre-tax charge of $5m in the fourth quarter to deal with the computer breach, which included the costs associated with investigating the issue, improving its security systems and notifying customers.

Those costs are likely to increase, given the multiple lawsuits customers have filed and investigations launched by a number of government agencies. According to the SEC filing, a multi-state investigation is currently underway that encompasses 30 states, and the Federal Trade Commission is also reviewing whether TJX violated US laws pertaining to consumer protection. In Canada, several privacy commissioner offices in various provinces are also reviewing the matter.

The security breach involving CardSystems, a third-party processor of payment data for banks and merchants, resulted in the exposure of credit card numbers for 40 million accounts - a figure comparable to the TJX case. Other notable cases include data broker ChoicePoint, which affected an estimated 145,000 Americans, and the University of California at Los Angeles, in which 800,000 people had their information compromised after a security breach.

In the case of TJX, Litan suspects attackers gained access through a wireless regional hub for the company's store controllers that handle the point-of-sale system. From there, they may have been able to work their way into TJX's central system, she noted.

She added: "Most retailers aren't looking at their point-of-sale system. Most enterprises tend to forget about the devices hanging off of their networks. What happened here may not be all that uncommon."

Dawn Kawamoto writes for CNET News.com