Investing.com -- Target Corporation (NYSE:TGT) announced on Wednesday that it has entered into a settlement agreement with Mastercard Incorporated (NYSE:MA) to resolve claims related to a data breach that compromised at least 40 million accounts during the 2013 holiday season and an additional 70 million accounts in what amounted to the largest cryptographic attack on a retail chain ever.
Under the agreement, Target will pay up to $19 million to eligible banks and credit unions that issued MasterCard-branded that were impacted by the breach. On November 27, 2013, two days before Black Friday, Target was exposed to a massive malware attack that went undetected for six days. By Dec. 19, Target announced that at least 40 million accounts were compromised during the three-week period.One day later, Target issued a public apology by offering customers a 10% discount on all Christmas purchases.
Last July, more than 65 class action lawsuits were consolidated against the retailer in U.S. District Court of Minnesota. At that point, former Target CIO Beth Jacob and CEO Gregg Steinhafel had already announced their resignations from the company.
The settlement stipulates that at least 90% of the issuers representing MasterCard accept the recovery offers from Target by May 20.
“We are hopeful that Target’s agreement to pay up to $19 million to settle the claims of MasterCard and its issuers will result in a high level of issuer acceptance," Scott Kennedy, President, Financial & Retail Services at Target said in a statement. "Target intends to continue to defend itself vigorously against any assessments made by MasterCard on behalf of MasterCard issuers that do not accept their offers.”
If the settlement is accepted, issuers will be paid by the end of the second quarter of 2015, MasterCard said in a statement.
“We believe this settlement provides our issuers a reasonable resolution of the Target data breach event,” MasterCard chief franchise integrity officer Eileen Simon said in a statement. “The timely reimbursement of costs and losses under the agreement delivers MasterCard issuers a faster and more certain resolution to the event, while reinforcing our commitment to maintain the integrity of industry security standards.”