Costs continue to mount for Target as the company works to put its massive 2013 data breach behind it. Target and Visa recently announced an agreement for Target to reimburse Visa card issuers as much as $67 million for costs associated with the historic breach. The settlement is considerably larger, and more likely to succeed, than the proposed $19 million deal between Target and MasterCard that issuers previously rejected as too low.
Visa indicated the settlement agreement has received support from its largest issuers. Reportedly, the settlement includes the maximum amount required per Visa’s regulations. However, a group of financial institutions that sued Target over the breach criticized the agreement as inadequate and said it fails to fully reimburse them for their losses.
Under the Visa settlement, Target will pay up to three times as much as the company would have paid per the prior deal with MasterCard, indicating that issuers had increased leverage in the negotiation process. Target stated that it had already accounted for the costs of the Visa settlement in its prior fiscal reports. MasterCard also said that it has been working closely with Target to reach a new agreement and that comparable terms will be offered to MasterCard issuers in the future.
On top of these settlement costs to payment card issuers, Target continues to expend significant resources dealing with related legal fall-out from the beach. While Target reached a $10-million preliminary settlement in the consumer class action lawsuit, several other lawsuits against the company are still pending. The derivative lawsuit is currently stayed while a special litigation committee investigates the breach. And in the financial institution litigation, the banks and Target have been arguing over confidentiality issues and what documents should be unsealed.
Stay tuned.