Target-MasterCard Data Breach Deal Falls Apart
A proposed $19 million settlement between Minneapolis-based Target Corp. and MasterCard International Inc. has fallen apart because not enough card issuers signed off on the deal.
Target continues to deal with the costs, fallout and legal issues connected to the massive data breach of the retailer’s customers, which came to light in late 2013.
Target announced the proposed settlement in mid-April, but noted: “The settlement is conditioned on issuers of at least 90% of the eligible MasterCard accounts accepting their alternative recovery offers, either directly or through their sponsoring issuers, by May 20, 2015.”
But late last week, it became clear that not enough issuers had signed off on the potential deal.
“MasterCard has informed Target that the 90% threshold was not reached by the May 20 deadline,” Target spokeswoman Molly Snyder said in an email.
Snyder added that Target had no further comment on the matter.
Attorneys representing banks, credit unions and other issuers in litigation over the data breach cheered the collapse of the settlement.
“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. Financial institutions clearly saw through Target's misleading statements and efforts to extinguish pending legal claims for pennies-on-the-dollar. 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,” said Charles Zimmerman of Zimmerman Reed and Karl Cambronne of Chestnut Cambronne in a joint statement. (Both law firms are based in Minneapolis.)
The attorneys had previously sought to block the Target/MasterCard deal, but the effort was turned aside by U.S. District Court Judge Paul Magnuson.
The coalition of attorneys suing Target is seeking class action status in its action, but the class has not yet been certified. Zimmerman and Cambronne are the co-lead plaintiffs’ counsel.
Last week, Target reported a net profit of $635 million on sales of $17.1 billion for its first quarter, which ended on May 2. The company’s sales reflected an increase of 2.8 percent compared to the same time period a year ago, which was in the immediate wake of the data breach.
The company’s first quarter earnings announcement also included an update on Target’s data breach costs to date. Since the fourth quarter of 2013, the data breach has cost the company $256 million, which is partially offset by $90 million in insurance proceeds. During the company’s first quarter this year, the company incurred $3 million in expenses related to the data breach.