ABA Banking Journal
Case: In re: Target Corp. Customer Data Security Breach Litigation
Issue: Whether 90 percent of the eligible MasterCard issuing banks will accept the settlement.
Case Summary: Target Corp. (Target) reached a settlement with MasterCard International Inc. (MasterCard) that agreed to pay financial institutions $19 million for costs incurred from the 2013 data breach.
Under the terms of the settlement, MasterCard will distribute up to $19 million of Target’s funds to the financial institutions that issued the network’s credit cards, and the funds will help cover the cost of reissuing bank cards and any related fraud. The settlement requires at least 90 percent of eligible MasterCard accounts to agree to the terms by May 20, 2015.
Upon accepting the eligible funds, the issuers will drop any claims against Target and its acquiring banks asserted in the multi-district litigation.
Bottom Line: On April 21, 2015, the financial institutions’ class filed a motion for a preliminary injunction arguing that the proposed settlement eliminates claims that are outside the scope of Target’s liability exposure to MasterCard, and misrepresents the extent of the financial institutions’ losses because it is based on MasterCard’s Account Data Compromise (ADC) program that does not fully reimburse banks for their losses.
