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Heartland Visa in 60M breach settlement
PRINCETON, N.J. (1/11/10)--Heartland Payment Systems and Visa Inc. announced a $60 million settlement in which issuers of Visa-branded credit and debit cards may recover losses incurred from the 2008 data breach of Heartland's card payments processing system. Heartland will pay up to $60 million to fund the settlement program, depending on conditions such as the level of participation by U.S. Visa issuers (PYMNTS.com Jan. 8). Visa said it would present details to eligible issuers soon. "We believe issuers will benefit by participating in this settlement program because it offers an immediate recovery with respect to losses they may have incurred from the Heartland intrusion,” said Ellen Richey, chief enterprise risk officer, Visa Inc. The agreement is contingent upon acceptance by financial institutions representing 80% of the eligible issuers’ U.S. accounts that Visa considered as under risk of compromise during the breach. It also includes mutual releases between Heartland and its sponsoring bank acquirers, on the one hand, and Visa on the other. Heartland will fund up to $59.22 million of the amounts to be made available to Visa and its issuers under the settlement program. Visa will credit the full amount of intrusion-related fines it previously imposed and collected from Heartland's sponsoring bank acquirers toward the $60 million maximum funding of the program. All U.S. card issuers who participate in the program will be eligible to receive a portion of the specified recovery. The settlement also includes recovery for international issuers of accounts Visa considered as under risk. Participation in the settlement program supplants any other recoveries that may be available to issuers through Visa and requires accepting issuers to release Heartland, its sponsoring bank acquirers and Visa from any legal and financial liability related to the Heartland intrusion. Visa will notify eligible issuers soon with details about the program and how to participate. It will send eligible issuers their formal offers to participate in the program on Thursday. To facilitate payment, eligible issuers have until 5 p.m. PT on Jan. 29 to opt-in to the program before the offer expires. Last month, Heartland entered two settlement agreements--a $3.6 million agreement with American Express and an agreement for up to $2.4 million in a consumer cardholder class action lawsuit (News Now Dec. 21 and Dec, 29). It also has disputes with MasterCard over the breach but no settlement has been announced. Breaches at Heartland and Hannaford Bros. grocery chain affected 130 million cardholders. Credit unions were among the financial institutions re-issuing cards that were compromised in the breaches and some saw fraudulent transactions on the compromised cards.
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