Class action lawyers representing banks in litigation against Target have blasted MasterCard's $19 million settlement with the US retailer over the 2013 data breach.
Earlier this week, MasterCard announced that it had reached a $19 million settlement with Target to reimburse member banks for expenses accrued following the massive 2013 data breach at the US retail chain.
The agreement has upset counsel for banks, credit unions, and other payment card-issuing financial institutions, who are currently undertaking multidistrict litigation against the retailer.
They claim that the $19 million settlement appears to represent a minimal portion of the actual damages incurred by card-issuing financial institutions.
In February last year, the National Association of Federal Credit Unions' released estimates that the breach could end up costing the credit union community alone nearly $30 million.
In a strongly-worded statement, the legal teams at Zimmerman Reed and Chestnut Cambronne claim that their clients were excluded from the private negotiations that led to the Target-MasterCard settlement.
"In reality, MasterCard’s settlement only appears to provide for a return of a small portion of card issuers’ reissuance and fraud loss damages caused by the Target data breach," they state. "MasterCard’s settlement has not been endorsed in any way by the financial institutions leading the case, by their Court-appointed lead counsel, or by the Court overseeing the ongoing multi-state litigation proceedings against Target in Minnesota federal court."
According to the terms of the deal agreed between the card scheme and Target, the settlement is contingent on issuers representing at least 90% of the eligible MasterCard accounts accepting the remediation by 20 May, 2015. Importantly, banks that participate in the MasterCard deal will have to release their class action claims.
Zimmerman Reed and Chestnut Cambronne recommend that "no financial institution enter into any release of claims with Target or MasterCard offered outside the ongoing litigation in the US District Court...without first understanding the rights available in those proceedings".
The Court is scheduled to hear the class action claims on 27 April.