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Target Settles Last of U.S. Data Breach Claims with $18.5 Million Settlement

Elizabeth DiNardo, Esq. | Associate Counsel

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On May 23, 2017, Target Corp. agreed to an $18.5 million settlement with 47 states and the District of Columbia, which resolves state investigations into a detrimental 2013 data breach. The settlement was the largest in history regarding multi-state data breaches.

The $18.5 million will be divided between states based largely on each state’s population size. The terms of the settlement will require Target to take advanced measures to secure their customers’ information, hire an executive to specifically oversee an information security program and hire an outside investigator to conduct an assessment of their new security practices. Most notably, Target will have to make major changes to the structure of their internal data-holding systems. The company will now have to keep consumer credit card data separate from the rest of its computer network to prevent another total security breach.

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After the 2013 attack, over 100 million Target customers were affected. Of those affected, 41 million had compromised customer payment card accounts, while 60 million had personal information stolen including, but not limited to, full names, phone numbers, email and mailing addresses, payment card numbers, expiration dates and encrypted PIN numbers.

Target announced the data breach in December 2013, explaining that customer information was stolen as the cards were swiped to complete in-store purchases between November 27 and December 15, 2013. According to investigations conducted by multiple state attorneys general, it was determined that the hackers exploited flaws in Target’s security systems and gained access to the company’s servers by utilizing stolen credentials from a third-party vendor. After the hackers accessed a customer service database, they installed malware in the system that captured shoppers’ data.

Following the attack, consumer and financial class actions were quickly filed. In December 2015, Target announced it reached a $39 million class-action settlement with the financial institutions and a $10 million settlement with consumers in an additional class-action suit. Regarding today’s news, a Target spokeswoman was “pleased to bring this issue to a resolution for everyone involved” after working for several years with state attorneys general to address their claims.

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