Settlement Proposed in Wendy's Data Breach Lawsuit

This week, a proposed settlement was submitted to the court in First Choice Federal Credit Union v. The Wendy's Company. If approved, it would conclude the data breach lawsuit from a 2016 data breach at certain Wendy’s franchise locations. The Michigan Credit Union League joined the lawsuit, along with the Credit Union National Association (CUNA) and other state leagues, in July of 2016.

The lawsuit alleges the breach, which started in October of 2015 and impacted numerous locations across Michigan, was due to poor data security measures, failure to discover and contain the breach and for neglecting to notify financial institutions of the compromise.

“We are pleased that Wendy’s has agreed to settle claims involving this data breach. The settlement provides a substantial financial recovery to credit unions that were harmed by the data breach” said CUNA President and CEO Jim Nussle. “We will continue to fight for recoveries on behalf of credit unions who bear the financial burden of merchant data breach costs. CUNA continues to pursue federal data security laws, making it much harder for merchants to compromise American consumers' payment card information.”

Under the terms of the settlement:

• Wendy’s will pay $50 million into a fund to compensate financial institutions that issued payment cards that were alerted on cards in connection with the data breach;
• Wendy’s will adopt and/or maintain certain data security measures; and

According to CUNA, financial institutions will be able to file claims for reimbursement without requiring supporting documentation. Financial institutions that file valid claims will be paid based on the total number of alerted on cards for this breach. For example, if valid claims are submitted for all eligible cards, Settlement Class Members could receive approximately $2 per alerted on payment card, if valid claims are submitted for approximately 40 percent of alerted on payment cards Settlement Class Members could receive approximately $4.80 per alerted on payment card. The amount paid will be based on the number of valid claims submitted.

Furthermore, subject to court approval, a service award of up to $7,500 will be paid to each financial institution Plaintiff who sat for a deposition and $2,500 to the remaining financial institution Plaintiffs named in the Consolidated Class Action Complaint.

If the U.S. District Court for the Western District of Pennsylvania approves the settlement, financial institutions will be paid under the claims process set up through the settlement.