Target will reimburse thousands of financial institutions for incurred costs related to the massive Target data breach back in 2013.
The hack attack exposed the personal information of millions of customers and also hurt numerous financial institutions. The data breach occurred during the 2013 holiday season and exposed a whopping 40 million credit and debit cards to fraud — for which Target is seeking to make amends.
The company has now reached an agreement with Visa, pledging to pay $67 million to Visa issuers, according to a new report from The Wall Street Journal.
"The agreement, struck with Visa Inc. on behalf of banks and other firms that issue credit and debit cards, comes as the card industry and merchants are moving toward more secure cards that are aimed at stopping such attacks," the WSJ reports.
In addition to the agreement with Visa, Target is reportedly working on reaching a similar deal with MasterCard to reimburse its card issuers. As the publication points out, these two settlements could come along the lines of the massive agreement Heartland Payment Systems reached back in 2010, when it paid more than $100 million to MasterCard and Visa over a 2008 breach.
It remains uncertain just how much fraud stemmed from the Target data breach back in 2013, but trade groups estimate that they spent more than $350 million as they represented credit unions and community banks, helping them reissue credit and debit cards, as well as handle other issues related to the Target hack and a Home Depot breach that followed shortly after.
Target wants to reimburse issuers for any fraud that resulted from certain debit card transactions, but on one condition: the issuers must agree not to sue Target. The aforementioned transactions reportedly covered Visa-branded debit cards "routed over other networks."
Not all parties are satisfied with this outcome. Some small financial institutions have already sued Target over the massive data breach and this new Visa agreement doesn't exactly make things right for them. The card issuers are seeking class-action status in the lawsuit against Target and find the Visa agreement insufficient as reimbursement for their losses, according to the WSJ.
The small lenders have Charles Zimmerman (of Zimmerman Reed PLLP) to represent them in their lawsuit, and Zimmerman is advising card issuers to decline the Visa settlement because it would prevent them from suing Target.