MasterCard's settlement with Target fails to get bank support

NEW YORK — A $19 million deal between Target and MasterCard to settle lawsuits stemming from the retailer’s massive pre-Christmas 2013 data breach has been scrapped because it didn’t get enough support from the affected banks and credit unions.

 

Advocates for the financial institutions said they were pleased, claiming the settlement would have provided compensation for just a fraction of the losses.

Under the deal announced last month, Target Corp. agreed to set aside $19 million for banks and credit unions that had issued MasterCards swept up in the breach that compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15, 2013.

Banks and credit unions would have been able to use the money to cover operating costs and fraud-related losses stemming from the breach. The settlement needed 90 percent of the issuers to accept the offer.

MasterCard Inc. would not reveal Friday how close it got to the 90 percent threshold.

“At this stage, we will continue to work to resolve the matter,” the company said in a statement.

Minneapolis-based Target confirmed that it had been notified by MasterCard of the development and declined further comment.

Lawyers for banks that had sued Target over breach-related losses called the settlement an attempt by Target to “extinguish pending legal claims for pennies-on-the-dollar.”

Lead attorneys Charles Zimmer­man and Karl Cambronne said in a statement that they will continue to push for “proper compensation” for their clients.

The National Association of Fed­eral Credit Unions issued a statement calling for full compensation for its affected members.

Target disclosed the massive breach Dec. 19, 2013, during the peak of the holiday shopping season. The disclosure hurt profits and sales for months.

The breach also pushed banks, retailers and card companies to increase security by speeding the adoption of microchips in U.S. credit and debit cards. Supporters say chip cards are safer because unlike magnetic strip cards, which transfer a credit card number when they are swiped at a point-of-sale terminal, chip cards use a one-time code that moves between the chip and the retailer’s register. The result is a transfer of data that is useless to anyone except the parties involved. Chip cards are also nearly impossible to copy, experts say.

The Target breach was a major factor behind the abrupt departure of its CEO, Gregg Steinhafel, in May 2014.

More

Thu, 06/22/2017 - 23:39

Rants & Raves