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Heartland Payment Systems Inc. intends to contest a fine of more than $6 million MasterCard Worldwide has levied against the transaction processor for a transaction breach reported earlier this year, according to Robert Carr, Heartland chairman and CEO. Princeton, N.J.-based Heartland reported $12.6 million of first-quarter expenses and accruals attributable to the 2008 network breach, which the company revealed in January. "More than 50% of this expense, however, relates to a fine that MasterCard assessed against our sponsor banks, ostensibly, because of an alleged failure by Heartland to take appropriate action" after discovering the network intrusion, Carr said during a recent conference call with analysts. Fines assessed by Visa Inc. against Heartland's sponsor banks totaled less than $1 million, he noted. Heartland considers MasterCard's fine to be in "direct violation" of MasterCard rules and applicable laws, said Carr. The processor "is prepared to vigorously contest" any liability that may be imposed on Heartland or its sponsor banks because of the fine, he said. "Heartland believes that it responded appropriately to all information that it learned" about the intrusion, and "it took immediate and extraordinary action to address the intrusion," said Carr. MasterCard did not respond to a request for comment by CardLine deadline, and Heartland did not respond to a request for additional information and clarification about MasterCard's fine.
