Banks challenge $19M Target breach settlement

Banks are challenging Target over its proposed $19 million data breach settlement with MasterCard, arguing that the sum is not enough to recoup their losses.

Financial institutions suing the retailer filed a motion seeking to void the settlement late Tuesday, urging the Minnesota-based federal judge overseeing the suit to stop the deal.

{mosads}In a statement, attorneys called the settlement a “sweetheart deal” that was negotiated without input from financial institutions that suffered losses from the breach.

“The agreement between Target and MasterCard is nothing more than an attempt by Target to avoid fully reimbursing financial institutions for losses they suffered due to one of the largest data breaches in U.S. history,” said a statement on Wednesday from Zimmerman Reed and Chestnut Cambronne PA, the plaintiffs’ law firms.

“It provides paltry restitution for the substantial losses suffered.”

Target’s data breach compromised 40 million credit and debit card accounts during the 2013 Christmas shopping season, and might have led to the theft of the personal information of up to 110 million people.

The retailer is working to settle with individual victims of the breach for a total of $10 million. Each victim will be eligible for up to $10,000 each, provided they can prove they spent time and money addressing unreimbursed charges on their accounts.

The MasterCard settlement is intended to help issuers with operating costs related to the breach and any fraud-related losses on cards. It was originally scheduled to take effect on May 20 if at least 90 percent of eligible issuers agree to the terms.

The motion to void the proposed settlement will be heard in court on Monday. Target is still in settlement negotiations with Visa, according to Reuters.