Target data breach settlement unravels as banks balk

Updated 3 p.m. | Posted 12:17 p.m.

Target's proposed settlement with MasterCard about the retailer's late 2013 data breach has failed to garner enough support from banks.

Under the plan, the Minneapolis-based retail giant would have paid up to $19 million to MasterCard issuers. But any bank accepting a settlement would have had to drop data breach claims against the company.

The proposed settlement needed support from 90 percent of banks that issue MasterCards to take effect.

Attorneys representing financial institutions suing over the massive data breach in late 2013 said the settlement was a bad deal. They argue banks, credit unions and other financial institutions have suffered hundreds of millions of dollars in costs due to fraud, card replacements and other related expenses.

"We are pleased that financial institutions have resoundingly rejected Target and MasterCard's attempt to avoid fully reimbursing the losses suffered during one of the largest data breaches in U.S. history," banks' attorney Charles Zimmerman said in a statement Friday.

The institutions "will continue working to hold Target accountable" to receive "proper compensation for losses resulting from this data breach," he added.

The case is expected to go to trial in about a year.

Target acknowledged the proposed settlement failed to win sufficient support but had nothing more to say.

Target estimates the breach affected 100 million people. Target recently settled a consumer class action lawsuit for $10 million.