Target Reaches $19M Data Breach Settlement with MasterCard

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UPDATE: A federal judge has preliminarily approved a $10 million class action settlement. Details on how to file a claim for the Target data breach settlement can be found here.

UPDATE 2: Fewer than 90 percent of payment card issuers accepted the proposed MasterCard settlement by the May 20, 2015 deadline, putting an end to the deal.

Target Corp. announced Wednesday that it has reached a $19 million data breach settlement with MasterCard International Inc. Under the terms of the proposed deal, financial institutions that issued MasterCard debit and credit cards that were compromised during the 2013 Target data breach will be able to recover the costs associated with fraudulent charges as well as the costs associated with reissuing payment cards.

According to a statement on the retailer’s website, the MasterCard settlement is contingent on the issuers of at least 90 percent of the eligible payment cards accepting the offer by May 20, 2015. Therefore, MasterCard is urging all eligible financial institutions to accept the deal.

“We are hopeful that Target’s agreement to pay up to $19 million to settle the claims of MasterCard and its issuers will result in a high level of issuer acceptance,” Scott Kennedy, President of Financial & Retail Services at Target said in a statement. “Target intends to continue to defend itself vigorously against any assessments made by MasterCard on behalf of MasterCard issuers that do not accept their offers.”

MasterCard has said the data breach settlement offers payment card issuers a “reasonable resolution” of their costs associated with the Target data breach. MasterCard issuers include major financial institutions such as Citigroup Inc., Capital One and JPMorgan Chase.

The Wall Street Journal reports that this proposed $19 million data breach settlement payout is nearly the same as the amount TJX Cos., parent company of the TJ Maxx retail stores, paid in 2008 to issuers of MasterCard payment cards following a data breach that compromised 100 million credit and debit cards.

At least 40 million credit and debit cards were reportedly affected by the massive Target data breach that occurred during the peak of the 2013 holiday shopping season. The data hack may have led to the theft of personal information from more than 100 million consumers.

If the conditions of the MasterCard settlement are satisfied, issuers who accept the deal will reportedly receive payment by the end of the second quarter of 2015. According to Target’s announcement, eligible issuers will soon receive a notice from MasterCard with details about the data breach settlement and how they can accept payment from the deal.

This settlement announcement comes less than one month after Target announced it will pay $10 million to settle the consolidated class action lawsuits filed by consumers in the wake of the 2013 data breach. The retailer is reportedly in negotiations with Visa related to financial institutions that issue Visa debit and credit cards that were affected by the Target data breach.

The Target Data Breach MDL is In re: Target Corp. Customer Data Security Breach Litigation, Case No. 0:14-md-02522, in the U.S. District Court for the District of Minnesota.