MasterCard Reaches Settlement with Heartland Payment Systems to Provide Issuers Worldwide up to $41.4 Million for Data Breach Claims

MasterCard Worldwide today announced it has reached a settlement with Heartland Payment Systems (Heartland) to resolve claims by MasterCard and its issuers in connection with Heartland’s previously announced data security breach.

The settlement agreement calls for Heartland to fund up to $41.4 million of "alternative recovery offers” to be made to eligible MasterCard card issuers to settle their claims for operational costs and fraud losses alleged to have been incurred by them as a result of the breach. Issuers accepting their offers must agree to certain terms and conditions.

"We feel that this settlement represents an appropriate and fair resolution for our issuing financial institution customers and will enable them to avoid uncertainties and delays associated with potentially protracted litigation,” said Wendy Murdock, chief franchise officer for MasterCard Worldwide. "The agreement underscores MasterCard’s continuing efforts to maintain the integrity of payment card industry standards and mitigate the impact of account data compromise events.”

Under the terms of the settlement, MasterCard card issuers that filed timely claims for reimbursement of operational expenses or to recover fraud losses on certain accounts processed by Heartland during 2008 will be eligible to receive a specified dollar payment with receipt expected during the third calendar quarter of 2010, if they choose to accept their offers.

The settlement is contingent upon, among other things, MasterCard card issuing financial institutions representing at least 80 percent of the claimed-on MasterCard accounts having accepted their offers by June 25, 2010.

Issuers that choose to accept their offers must agree to forgo any other remedies or recoveries they might otherwise be able to obtain from Heartland and its acquirers by reason of the Heartland data security breach, and to release MasterCard, Heartland and Heartland’s acquirers from all legal and financial liability associated with the breach.

Issuers that elect not to accept their offers will have their claims determined pursuant to MasterCard’s internal processes. They may receive more or less than the amounts they were offered, or nothing at all, depending on various factors, including MasterCard’s determinations of their claims and the outcome of any litigation that Heartland may file, and has threatened to file, to challenge claim awards that exceed certain amounts.

All MasterCard card issuers eligible to participate in the settlement should expect to soon receive notification from MasterCard with full details of the settlement and the steps necessary to accept their offers. Eligible issuers will have until June 25 at 5 p.m. ET to accept their offers before the offers expire.

About MasterCard Worldwide

MasterCard Worldwide advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes approximately 22 billion transactions each year, and provides industry-leading analysis and consulting services to financial-institution customers and merchants. Powered by the MasterCard Worldwide Network and through its family of brands, including MasterCard®, Maestro® and Cirrus®, MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com. Follow us on Twitter@MasterCardNews.