ST. PAUL, Minn. (5/26/15)--Lacking sufficient support from financial institutions, a $19 million deal between Target and MasterCard to settle damages incurred as a result of 2013’s massive data breach was squashed last week, MasterCard announced.
Typical settlement deals between merchants and card networks in the aftermath of data breaches send money to the card networks, which then disburse funds to the financial institutions that suffered losses as a result of the incident.
This deal would have worked similarly, but only if more than 90% of affected financial institutions accepted its terms and agreed to relinquish other claims by May 20.
While MasterCard and Target have said they will continue to work towards a new deal, the focus now shifts to the class-action lawsuit filed by financial institutions making its way through U.S. District Court in St. Paul, Minn.
“We are pleased that financial institutions have resoundingly rejected Target and MasterCard’s attempt to avoid fully reimbursing the losses suffered during one of the largest data breaches in U.S. history,” said Charles Zimmerman and Karl Cambronne, the attorneys representing the financial institutions in the class-action case (Minneapolis Star Tribune May 22).
CUNA, which continues to press state and federal lawmakers to pass legislation that would require merchants to uphold the same stringent payment data security standards that financial institutions must meet, found that credit unions nationwide suffered more than $30.6 million in losses as a direct result of the Target breach in late 2013.
“Financial institutions clearly saw through Target’s misleading statements and efforts to extinguish pending legal claims for pennies-on-the-dollar,” the attorneys added. “We will continue working to hold Target accountable and ensure that all affected financial institutions receive proper compensation for losses resulting from this data breach.”
The class-action case is expected to go to trial in 2016.