Target announced that it is about to finalize a
deal with MasterCard that will reimburse banks around USD 19 million for
expenses related to the former's massive security breach that compromised
millions of credit card accounts.
It may be recalled that two years back, Target
admitted to at least compromising 40 million credit card records due to a data
breach during the peak of a holiday season. It was believed that the
cyberattack endangered up to 110 million people by exposing their personal
credentials like phone numbers and addresses. In a statement Esset Koyal Group Capital Management got,
the cost of the settlement -- resulting from months of negotiations -- covers
bank expenses associated with reissuing cards to affected customers.
MasterCard negotiated on behalf of their partner
banks that have to deal with Target's security breach, with JP Morgan, Capital
One and Citigroup among the biggest issuers. Their deal with Target is based on
the presumption that 90% of the account holders would eventually accept their
settlement offer.
Target and MasterCard expects that victims of
the security breach will accept the agreement. MasterCard has issued a
statement saying, "We believe this settlement provides our issuers a
reasonable resolution of the Target data breach event. 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."
Esset Koyal Group Capital Management disclosed
that in Target's financial filing, USD 252 million was the cost associated with
the data breach. Their settlement seems to highlight yet another example of how
expensive it is to do damage-control after a huge security breach.
The Target breach, which compromised around 40
million card credentials have been particularly worrying for the public as it
happened during a shopping season. And further complicating matters in the
settlement negotiations are the succeeding data breaches involving large names
such as Home Depot.
The series of high-profile breach also resulted
in demands for merchants to accept only those cards that have an embedded chip
that makes it less vulnerable to illegal replication. Since then, Target has
taken steps to update its terminals in accordance with the newer, more secure
ones issued by banks.
Meanwhile, the retailer is still conducting a
separate negotiation with Visa-supported cards.