The mouse that roared?
by: Henry Meier
The news that the proposed $19 million settlement between MasterCard and Target has been rejected, in no small part because of the vocal opposition of credit unions that complained that the proposed deal didn’t adequately compensate smaller issuers for the costs of the breach that impacted as many as 40 million cards and 110 million people, is an important victory for the industry. It demonstrates that the concerns of smaller institutions have to be a major focus of any efforts by the courts and policymakers trying to apportion the costs of data breaches. This may have been the moment when the little financial institutions came together and announced that, when it comes to data breaches, “they’re mad as Hell and they are not going to take it anymore.”
Under an agreement announced between MasterCard and major issuers in March, issuers would have gotten $19 million to settle claims related to the breach provided that at least 90 percent of card issuers signed off on the deal by May 20th. If you, like your faithful blogger, were already in long-weekend mode on Friday, you may have missed the news. As NAFCU’s Carrie Hunt said in this morning’s American Banker, “[t]he failure to opt in to the settlement by financial institutions sends a strong signal to card companies that the current reimbursement system does not work and financial institutions need to be made whole.”
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