Settlement rejected in Target data breach

A $19 million deal between Target and MasterCard to settle lawsuits stemming from the retailer’s massive pre-Christmas 2013 data breach has been scrapped because it failed to get enough support from the affected banks and credit unions.

While the rejection sends the companies back to the drawing board, advocates for the financial institutions said they were pleased, claiming that the settlement would have provided compensation for a small fraction of the losses.

Under the settlement announced last month, Target agreed to set aside $19 million for banks and credit unions that had issued MasterCards swept up in the breach that compromised 40 million credit and debit card accounts between Nov. 27 and Dec. 15, 2013.

Banks and credit unions would have been able to use the money to cover operating costs and fraud-related losses stemming from the breach. But the settlement needed 90 percent of the issuers to accept the offer for it to go into effect.

MasterCard would only say Friday that not enough issuers approved the deal. It would not reveal how close it got to the 90 percent threshold. “At this stage, we will continue to work to resolve the matter,” the company said in a statement.

Target confirmed that it had been notified by MasterCard of the development and declined further comment.

Attorneys for banks that sued Target over breach-related losses called the settlement an attempt by Target to “extinguish pending legal claims for pennies on the dollar.” Lead attorneys Charles Zimmerman and Karl Cambronne said they will continue to push for “proper compensation” for their clients. The National Association of Federal Credit Unions also called for full compensation for its members.

— Associated Press

Cigarette firms don’t have to say they lied

America’s largest tobacco companies must inform consumers that cigarettes were designed to increase addiction, but not that they lied to the public about the dangers of smoking, a federal appeals court ruled Friday.

The ruling from the U.S. Court of Appeals for the District of ­Columbia Circuit is a partial win for cigarette makers in the long-running legal fight that began in the Clinton administration in 1999. In this latest round, the companies objected to running court-ordered advertisements that would have branded themselves as liars.

The ads would have begun with a preamble statement that the companies “deliberately deceived the American public.” The ads stem from a 2006 court ruling ordering the companies to admit they had lied for decades about the dangers of smoking.

The companies called that statement overbroad and misleading. But government lawyers argued the language was meant to provide context for the public.

The appeals court ruled that the language must focus on preventing future violations, not past misconduct. Writing for the three-judge panel, Judge David S. Tatel said the preamble language in the ads about past deception went beyond the remedies allowed under federal racketeering laws.

But Tatel said other language in the ads that stated the companies intentionally designed cigarettes with enough nicotine “to create and sustain addiction” was within the bounds of the law. The appeals court also approved statements that said the companies “intentionally designed cigarettes to make them more addictive.”

— Associated Press

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