FRAMINGHAM, Mass. – TJX Cos. announced yesterday that 95% of credit unions and banks affected by the company’s massive data breach had approved a $40.9 million payout to cover costs they incurred to notify customers and reissue cards, giving the go-ahead to the settlement.
By agreeing to the settlement, credit unions and banks waive their rights to pursue further damages against TJX, Visa and Fifth Third Bancorp, the merchant acquirer in the case, and they will receive their payouts by Dec. 27.
The settlement covers Visa card issuers that were affected by the massive breach, in which an estimated 100 million consumer records were stolen.
The deal not only helps clear the way for Visa’s planned initial public offering early next year, but also for a deal with MasterCard issuers affected by the TJX breach, observers said.
But several large credit unions, who had to reissue tens of thousands of cards after the breach, are believed to have opposed the settlement and are planning to file suits individually, according to several sources. They will each have to file their own suit because a ruling by a federal judge last week rejected class status for the affected credit unions and banks.
Dan Egan, president of the Massachusetts CU League, said yesterday he believes most of the smaller credit unions agreed to the TJX settlement because they did not have to reissue as many cards and do not have the financial resources to sue TJX individually.
The settlement comes a few days after TJX settled with banks from Massachusetts, Connecticut and Maine. Though the amount of the settlement was not disclosed publicly, Egan said he believes it will only cover legal costs and not other expenses for notifying customers of the breach, cancelling, then reissuing new cards.
TJX is one of the biggest retailers in the country, operating more than 2,500 TJ Maxx, Marshall’s, HomeGoods, AJWright, Bob’s and HomeSense stores.
The settlement is particularly complicated because all of the different participants, TJX, the credit card companies and the credit unions and banks, conduct millions of dollars of business with each other.
