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As part of its settlement agreement with MasterCard International, retailer Target Corp. will fund up to $19 million in recovery payments to card issuers affected by Target's data breach in the fourth quarter of 2013.
Under the agreement, MasterCard will make alternative recovery offers to eligible issuers worldwide that issued MasterCard-branded payment cards claimed to have been affected by the data breach.
“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," said Scott Kennedy, Target's president of financial and retail services. "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.”
The settlement is conditioned on issuers of at least 90 percent of the eligible MasterCard accounts accepting their alternative recovery offers, either directly or through their sponsoring issuers, by May 20. The estimated costs of this settlement are already reflected in the data breach liabilities that Target established during fiscal 2013 and 2014.
Accepting issuers will be paid by the end of the second quarter of 2015, and release and indemnify Target and its acquiring banks from any further breach claims. All eligible issuers will soon receive notification from MasterCard with full details of the agreement and how to accept their alternative recovery offers.
Minneapolis-based Target Corp. operates 1,795 stores across the United States.