Target recently offered a $19 million settlement with MasterCard in an effort to put the lingering effects of its massive 2013 data breach behind them. However, the settlement collapsed, in large part because it didn't get enough support from the impacted banks and credit unions.
In its proposed settlement, Target offered to pay $19 million to banks and credit unions that had issued MasterCards affected by the breach that compromised 40 million credit card and debit card accounts. The funds would have been passed on to these financial institutions to cover operating costs and fraud-related costs from the data breach. The proposal required that 90 percent of the impacted issuers would be on board.
MasterCard came back to Target to explain that they did not have 90 percent of issuers accepting the deal.
MasterCard did not share the percentage of issuers that agreed to the terms, but said in a statement, "At this stage, we will continue to resolve the matter."
Lead lawyers for the banks emphasize that the proposed settlement falls short of their claims for damages.
In a joint statement, attorneys Charles Zimmerman and Karl Cambronne said: "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," according to USA Today.
According to these lawyers' estimates, financial institutions that issued MasterCard credit cards and were affected by the breach lost an estimated $160 million. This is due to a variety of costs, including fraudulent charges and the expense of reissuing cards.
The next step in this case includes a federal lawsuit seeking class action status that is scheduled to go to trial in March of 2016 in the Federal District Court in Minnesota, where Target is based.
In the meantime, Target is taking additional measures to address the lingering impacts of the breach. For example, the retail giant recently overhauled its divisions committed to handling security and technology. The company also upgraded its cash registers to accept chip cards for more secure transactions in almost 1,800 stores.
The consumer portion of the suit was settled in March 2015, when Target agreed to pay victims up to $10 million. Under the terms of the settlement, Target customers who can prove they were damaged by the data breach can seek reimbursement for unauthorized credit card charges, bank fees and other costs related to the breach. Each customer can receive up to $10,000 in damages.