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MasterCard's $19m Target settlement falls through

22 May 2015  |  7974 views  |  0 STOP

MasterCard's $19 million settlement with Target over the retailer's data breach has collapsed in the face of opposition from banks.

Last month MasterCard announced that it had reached a settlement with Target to reimburse member banks for expenses accrued following the massive 2013 data breach at the US retail chain.

However, the deal upset counsel for banks, credit unions, and other payment card-issuing financial institutions, who are currently undertaking multidistrict litigation against the retailer.

The lawyers argued that the settlement was an effort to stymie their claims and tried to block it, but a judge rejected their effort.

However, according to Reuters, the settlement has now fallen apart anyway. The deal needed banks that issued at least 90% of the MasterCard accounts to back it by 20 May, thereby giving up any further claims against Target.

MasterCard confirmed to Reuters that it has not reached the 90% threshold, leaving the way clear for banks to continue their suit against Target.

Responding to the news, National Association of Federal Credit Unions general counsel Carrie Hunt says: "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."

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