security breach at discount retailer BJ's Wholesale Club, Inc. has turned into a potentially very expensive endeavor for the company.

In March 2004, MSNBC reported that hackers gained access to several hundred credit and debit card account numbers belonging to people who made purchases at BJ's. The card numbers were then used to make fraudulent purchases in the United States, Europe and the Asia-Pacific region.

In response, BJ's shut down some its IT systems at the stores and hired an independent auditor to find out what happened; BJ's claims that no conclusive evidence of a breach was found.

"We are confident in the current safety and integrity of our systems," said Bob Hamilton, Vice President of Loss Prevention at BJ's. "This type of crime is the fastest growing crime in America and is a major concern for all retailers, including BJ's.

"We take this issue very seriously and we are continually working to employ advanced technologies to ward against increasingly sophisticated credit card information theft schemes.

"We remain fully committed to protecting the privacy of our members and the security of their information and are working with credit card companies and law enforcement to identify and prosecute these criminals to the full extent of the law."

Up to 15 banks acknowledged that thousands of their customers' accounts had been put in danger because of the breach; the card Associations' policies are to let their member banks decide whether or not to immediately reissue customers' cards, which can cost up to $35 per account, or to monitor the accounts for three to six months.

Some of the banks include First Citizens Federal Credit Union, which said it would reissue 1,300 Visa debit cards; Finger Lakes Federal Credit Union which froze 1,000 Visa accounts of its customers; Sovereign Bank which reissued 81,000 cards at a cost of $1 million, and Pennsylvania State Employees Credit Union which reissued 14,000 cards at an approximate cost of $100,000.

Now the card issuers want BJ's to pay them up to $16 million, including $6 million to cover the fraudulent credit card purchases and $10 million to cover their costs for card reissuing.

In an SEC filing, BJ's said it plans to "vigorously contest the claims made against it and is exploring its defenses and possible claims against others."

BJ's operates 150 warehouse stores and 78 gas stations in the eastern United States.