The Wall Street Journal reported Tuesday morning that the Target and MasterCard $19 million settlement over a large data breach was rejected last month by Citigroup, Capital One and J.P. Morgan Chase & Co. WSJ sources claim that the deal was rejected because settlement payments were not large enough to cover the banks’ losses.
The 2013 Target breach allegedly put 40 million credit and debit cards at risk, leading to large monetary costs for banks that issued cards. The rejection of the settlement suggests that the case will likely move to court, where the parties will seek a more profitable deal than offered by the settlement.
What Happens Next in the Target and MasterCard Settlement?
The settlement that was on the table required 90 percent of issuers to approve the offer, reported CBS News last month. In a statement released during that time, MasterCard said, “At this stage, we will continue to work to resolve the matter.”
Attorneys Charles Zimmerman and Karl Cambronne, representatives of the banks, told USA Today in May, “We are 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.”
According to the WSJ, banks usually approve of such settlements made on their behalf. In this case, both big and small financial institutions are rejecting the deal. Small banks and credit unions have even filed a lawsuit against Target in a Minnesota court over the breach. If it becomes a class action in the upcoming months, banks and large issuers like Citigroup, Capital One and J.P. Morgan Chase could also jump on board.
As reported by the WSJ, “It also isn’t clear what it will take for Citigroup, Capital One and J.P. Morgan Chase to support a potential new settlement.”
Related: Target Reaches $10M Settlement in Data Breach Lawsuit
Financial Institutions Install Security Chips in Credit Cards
Following the Target data breach, banks, retailers and card companies have implemented more secure measures at a faster pace. One of these measures is the installation of microchips in U.S. credit and debit cards, reports CBS News. Instead of transferring the customer’s data — including the card’s number — from the card to the point-of-sale terminal, the card uses a one-time code that gives the retailer the information it needs without making the information vulnerable to third-party access.
Photo credit: Ken Wolter / Shutterstock.com
This article originally appeared on GOBankingRates.com: Citigroup, Capital One and J.P. Morgan Chase Reject $19M Target and MasterCard Deal
This article by Misha Euceph first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.
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