They say that the reimbursement doesn’t begin to cover the costs associated with issuing new cards and adding more call-center staff to handle customer questions. card network.Ĭard issuers have long complained about the process by which they are reimbursed for data breaches and the fraud that results from them. The offer to MasterCard comes two months after card issuers unexpectedly rejected a $19 million settlement that Target had negotiated with the Purchase-N.Y. “We are prepared to resolve the matter on comparable economics with MasterCard and its customers,” Target said in a statement. Target said the costs of the settlement were already reflected in its previously reported fiscal 20 results. The maximum amount to be paid by Target under both scenarios is $67 million. Those transactions cover debit cards that are branded by Visa, but are routed over other networks, these people said. Target is also dangling an incentive to issuers that will reimburse them for any fraud that stemmed from certain debit-card transactions as long as those issuers agree not to sue the retailer, said people familiar with the pact.
People familiar with the settlement said that the amount being paid by Target includes the maximum amount that is laid out in Visa’s regulations. The card network notified smaller issuers about the pact on Tuesday and advised them how much they would be reimbursed. Visa said “this agreement attempts to put this event behind us” as it concentrates on the move toward more secure payments. Target said that the deal has already received support from Visa’s largest card issuers.
Target and Visa confirmed that they struck a deal, although they didn’t announce the amount that would be paid in the settlement or details of the pact. General counsel of the National Association of Federal Credit Unions, a trade group. “This settlement is a step in the right direction, but it still may not make credit unions whole,” said Trade groups representing community banks and credit unions estimate that they spent more than $350 million to reissue credit and debit cards and deal with other issues tied to the Target breach and the subsequent Home Depot hack. The exact amount of fraud that resulted from the Target breach still isn’t known. It was followed by a string of similar breaches at other well-known merchants, including Home Depot Inc., luxury retailer Neiman Marcus Group Ltd. The Minneapolis-based company’s breach ranks among the most high-profile data incidents to strike retailers in recent years. Target’s data breach exposed 40 million credit and debit cards to fraud during the 2013 holiday season.
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