May 23 (Reuters) - Target Corp on Tuesday agreed to pay $18.5 million to settle claims by 47 states and the District of Columbia and resolve a multi-state investigation into the retailer's massive data breach in late 2013.
The investigation — led by the Attorneys General of Connecticut and Illinois — found that cyber attackers had accessed Target's gateway server through credentials stolen from a third-party vendor, New York Attorney General Eric Schneiderman said in a statement on Tuesday.
In one of the biggest data breaches to hit a U.S. retailer, Target had reported that hackers stole data from up to 40 million credit and debit cards of shoppers who had visited its stores during the 2013 holiday season.
California will receive more than $1.4 million from the settlement, the largest share of any state, California Attorney General Xavier Becerra said.
The costs associated with the settlement are already reflected in the data breach liability reserves that Target has previously recognized and disclosed, the company said in a statement.
Target also said the total cost of the data breach had been $202 million.
Notable data breaches in the US recently
Notable data breaches in the US recently
LONDON, ENGLAND - AUGUST 19: A detail of the Ashley Madison website on August 19, 2015 in London, England. Hackers who stole customer information from the cheating site AshleyMadison.com dumped 9.7 gigabytes of data to the dark web on Tuesday fulfilling a threat to release sensitive information including account details, log-ins and credit card details, if Avid Life Media, the owner of the website didn't take Ashley Madison.com offline permanently. (Photo by Carl Court/Getty Images)
Katherine Archuleta, director of the U.S. Office of Personnel Management (OPM), speaks during a House Oversight and Government Reform Committee hearing on the OPM data breach in Washington, D.C., U.S., on Wednesday, June 24, 2015. U.S. senators said yesterday they doubt the government's personnel office understands the breadth of a computer hack that exposed the records of more than 4 million federal workers, or that the agency can stop another breach. Photographer: Andrew Harrer/Bloomberg via Getty Images
WASHINGTON, DC - JUNE 05: The entrance to the Theodore Roosevelt Federal Building that houses the Office of Personnel Management headquarters is shown June 5, 2015 in Washington, DC. U.S. investigators have said that at least four million current and former federal employees might have had their personal information stolen by Chinese hackers. (Photo by Mark Wilson/Getty Images)
SCHAUMBURG, IL - AUGUST 04: A statue of a horse stands at the entrance to a P.F. Chang's restaurant on August 4, 2014 in Schaumburg, Illinois. P.F. Chang's China Bistro Ltd. said today that the company experienced a data breach involving customers' credit and debit card information which affected 33 restaurants in 16 states, including the Schaumburg, Illinois location. (Photo by Scott Olson/Getty Images)
PORTLAND, ME - AUGUST 15: Shaws on Congress Street on Friday, July 15, 2014. Shaws parent company is investigating a possible data breach. (Photo by Logan Werlinger/Portland Press Herald via Getty Images)
COLMA, CA - APRIL 18: Customers enter a Michaels art and crafts store on April 18, 2014 in Colma, California. Michaels, the largest arts and crafts chain in the U.S., announced that an estimated 2.6 million cards used at its stores across the country may have been affected by a security breach. Aaron Brothers, a subsidiary of Michaels, was also affected by the breach. (Photo by Justin Sullivan/Getty Images)
CORAL GABLES, FL - FEBRUARY 28: A checkout keypad is seen at a Sears store on February 28, 2014 in Coral Gables, Florida. According to reports the U.S. Secret Service is investigating a possible digital attack at Sears Holdings Corp. (Photo by Joe Raedle/Getty Images)
A couple of shoppers leave a Target store on a rainy afternoon in Alhambra, California on December19, 2013, as the US retail giant said some 40 million customers may have had bank card data compromised by hackers who broke into its database as holiday shopping got underway. Target said there had been 'unauthorized access' to its payment system in US stores affecting credit and debit cards with approximately 40 million credit and debit cards possibly affected by the breach between November 27 and December 15, the company said in a statement. AFP PHOTO / Frederic J. Brown (Photo credit should read FREDERIC J. BROWN/AFP/Getty Images)
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Target spokeswoman Jenna Reck said the company has so far settled with financial institutions and states but is yet to finalize a consumer settlement. "There is a class action settlement that is outstanding. We have reached an agreement but it hasn't been legally finalized yet."
As part of the settlement announced on Tuesday, Target is required to adopt advanced measures to secure customer information such as employing an executive to oversee a comprehensive information security program as well as advise its chief executive and board.
The company is also required to hire a independent, qualified third party to conduct a comprehensive security assessment and encrypt or otherwise protect card information to make it useless if stolen.
The Minneapolis-based retailer's shares were down 0.6 percent at $55.13 in afternoon trade. (Reporting by Sruthi Ramakrishnan, Nandita Bose; Editing by Anil D'Silva, Bernard Orr)