Target Settles Consumer Data Breach Class Action for $10 Million

Mar 25, 2015

Reading Time : 1 min

Before consumers start planning their next shopping spree with their settlement funds, they should be warned: it will not be as easy as it may seem to get a payout. Under the terms of the proposed settlement, the burden of proof lies with the plaintiff. Thus, claims would be based on whether plaintiffs can show they have suffered at least one of the following:

  • unauthorized, unreimbursed credit card charges
  • time spent dealing with unauthorized charges
  • costs to hire someone to help correct credit reports
  • higher interest rates
  • loss of access to funds
  • fees paid on accounts or
  • credit-related costs, such as credit monitoring or purchasing credit reports.

The bulk of provable damages would fall under the first category. However, many cardholders have been reimbursed by their card issuers for the fraudulent charges and therefore will be unable to recover twice. These card issuers have filed their own, separate class action lawsuit against Target, and the company’s motion to dismiss that suit was also denied. Many speculate that the potential strength of the claims by the financial institutions in that suit, who bore the bulk of the damages from reimbursing their cardholders for the fraudulent charges, was a driving force in Target’s settlement of the consumer claims. Target’s swift settlement was also likely fueled by obtaining a relatively low settlement amount. The cost of a large data breach settlement not involving medical records is typically around $1 per class member. Target’s $10 million payout to an estimated 110 million class members is well below that. In addition, an early settlement cuts Target’s hemorrhaging ongoing litigation and data breach response costs; this settlement amount does not hold a candle to the $252 million that the company has spent thus far in responding to the breach.

Class members have until July 31 to opt out of the class, and the final settlement approval hearing is set for November 5, 2015. It remains to be seen whether Target will, or can, settle its other suit with the financial institutions.

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