The Heartland Data Breach Fight Continues

Written by Evan Schuman
February 11th, 2010

In the never-ending saga of the lawsuit aftermath of the Heartland Payment Systems data breach, Heartland and Visa last Thursday (Feb. 4) announced that “more than 97 percent” of the financial institutions that had sued them had accepted their $60 million settlement terms. That statement was obviously followed by an announcement a few days later from representatives of the three percent saying, in effect, “We’re still here. See you in court.”

“Visa sent customized settlement information packets to the affected financial institutions on January 14, 2010. In order to accept the settlement, a financial institution was required to affirmatively complete and return the settlement paperwork to Visa by January 29, 2010,” said the statement from lawyers representing some of the impacted banks. “The offers–at least those reviewed by class counsel–appeared to be less than 10 cents on the dollar for most financial institutions and some at less than 1 cent on the dollar.”

The statement said that the 97 percent acceptance was “as expected given the fact that the vast majority of the compromised cards were issued by a relative handful of mega banks. The settlement offer has now been remade to the remaining financial facilities, with Visa and Heartland giving them until Feb. 8 to decide.”

“If Visa truly had the financial institutions’ interests at heart, why didn’t Visa give everyone 30 days at the outset to decide whether to accept the offer?” asked Joe Sauder of Chimicles & Tikellis LLP, one of the co-lead interim counselors for the financial institutions in the federal court class action case. “We have asked this question since Visa first announced the settlement. There was no reason to set an arbitrary and unreasonably short deadline.”

Mike Caddell, another attorney for the group, said there’s no reason for the financial companies that declined before to accept this time.

“The bottom line is that the ‘renewed’ deals Heartland and Visa are currently offering are precisely the same deals offered two weeks ago,” Caddell said in a statement. “The calculus remains the same for the financial institutions based on their own unique damages experiences and, most important, these ‘renewed’ settlement offers will in no way impact the federal class action in Houston–we are committed to going forward and intend to vigorously litigate this action.”


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Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
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The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
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