Attorneys Announce $39 Million Settlement for Target Data-Breach Class Action

Attorneys for financial-institution plaintiffs suing Target Corp. to recoup their costs arising from Target’s massive 2013 data breach announced a $39.4 million settlement on Wednesday intended to bring their class-action lawsuit against the big-box retailer to an end.

A U.S. District Court judge in St. Paul, Minn., was expected to review the proposed settlement late Wednesday for possible preliminary approval.

The settlement includes $20.25 million that Target will pay into an escrow fund, which will be available to banks and credit unions that haven’t already released their breach-related claims against Target.

In addition, Target will drop any further challenge to the $19.1 million assessment, or fine, that MasterCard Inc. levied on it in the wake of the breach. That money will become available to MasterCard issuers that have not yet settled their Target claims.

In May, a MasterCard-endorsed proposed settlement to compensate MasterCard issuers for their breach-related costs for that same amount failed to get the 90% approval rate needed to proceed. A MasterCard spokesperson could not be reached about today’s developments.

“The settlement is a strong and important result for those financial institutions that sustained losses as a result of the Target data breach, providing compensation well beyond what the card-brand networks offered,” the lead plaintiffs’ attorneys, including Charles Zimmerman of Minneapolis, said in statement, according to the Minneapolis Star Tribune.

Visa Inc. in August announced a settlement that will pay its issuers up to $67 million for their Target-related fraud and card-reissuance expenses.

The data breach affected 40 million credit and debit cards in all. Afterward, in addition to fortifying its security systems, Target speeded up its plans to accept EMV chip cards as well as convert its Target-branded payment cards to chips.

In its latest quarterly report to the Securities and Exchange Commission, Target says it has incurred $290 million in expenses since the breach happened, offset by $90 million in insurance coverage for a net cost of $200 million.

Target still faces shareholder lawsuits arising from the breach and investigations by state attorneys general and the Federal Trade Commission.