The news that Target and MasterCard both failed to reach the required approval thresholds for the $19 million settlement tied to security breaches set off a flurry of press releases from the companies and interested parties last week.
As reported by the Credit Union Times Friday (May 22), neither company reached the 90 percent participation rate by the May 20 deadline, and so, the site opined, “a long process” has begun.
As had been reported last month, Target had been slated to pay $19 million to banks that had issued MasterCards used in 2013 data breach. The settlement would have covered the cost of issuing new cards and also provided for restitution over fraudulent transactions.
Target provided a statement to CU Times that restated the threshold failure, adding that “Target has nothing further to share at this time.”
MasterCard, for its part, also offered up a statement, which stated in part that “The alternative recovery offers were provided to issuers as a way to deliver to them certain and prompt payments for a portion of the costs they incurred as a result of the Target data breach, including card reissuance costs and fraud losses. At this stage, we will continue to work to resolve this matter.”
At least some interested parties saw the settlement’s failure as good news. CU Times reported that Charles Zimmerman of Zimmerman Reed PLLP and Karl Cambronne of Chestnut Cambronne PA – who together represent five financial institutions against the settlement the settlement – noted in their own release that they were “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,” the attorneys said. “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.”
It’s unclear for now whether Target and MasterCard will attempt to renegotiate the settlement, Cambronne told CU Times. One future option might include class certification for issuers, and a court hearing is scheduled for this Wednesday.
The National Association of Federal Credit Unions also chimed in, noting through its general counsel Carrie Hunt that “the failure to opt in to the settlement by financial institutions sends a strong signal to card companies that the current reimbursement system does not work and financial institutions need to be made whole.”
To check out what else is HOT in the world of payments, click here.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More