Lessons Learned From PCI Compliance

Assessors reveal mistakes companies make with data security standard.
Whether you think PCI is a useful standard that makes our credit card data safer or a credit card industry whitewash that merely creates the illusion of security, PCI compliance is a fact of life.

As part of PCI compliance, companies that process a high volume of credit card transactions must submit to an annual assessment by a qualified security assessor, or QSA. For example, Visa requires it of merchants that process 6 million or more transactions. Assessors work for third-party organizations and generally visit companies to examine their processes and determine whether they comply with PCI rules.

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To help companies get ready for a an evaluation, we asked QSAs to describe common problems they encounter when working with IT groups on PCI compliance. What follows are five best practices to help companies better prepare for an assessment and maintain compliance. Information Week

PCI Compliance: A Moment In Time

When it comes to PCI compliance, merchants and software vendors alike often make the mistake of viewing their compliance as a "checklist" rather than an ongoing process. Too many people assume that PCI compliance is achieved once. In reality, however, it is maintained, through vigilant adaptation to both PCI requirements and evolving security threats.

A closer look at PCI DSS requirements should make it quite clear that compliance is an ongoing exercise. For example, requirement 1 reads, "Install and maintain a firewall configuration to protect cardholder data." Requirement 5 mandates that you "Use and regularly update anti-virus software." Requirement 6 states that you "Develop and maintain secure systems and applications." Requirement 11 implores that you "Regularly test security systems and processes." And, of course, Requirement 12 states that you must "Maintain a policy that addresses information security."

Clearly, five of the twelve PCI requirements explicitly mention either maintaining or updating, which should make it clear to all paying attention that there is no finality to PCI compliance. Business Solutions

Analyst: PCI Security a Devil, 'Like No Child Left Behind'

BOSTON -- By obsessing about PCI security compliance and spending money on overly complex and underperforming defenses, companies are ignoring risk management and making themselves a target of state-sponsored cyber villains.

That was one of the main messages delivered by Joshua Corman, research director for enterprise security at The 451 Group, during that firm's 4th Annual Client Performance Conference Wednesday morning.

"Organizations have made PCI DSS and compliance in general the basis of their information security policies," he said. "They're basing security on sloppy logic from Visa and MasterCard and in the process are ignoring some very bad state-sponsored threats. As a community, we have not evolved at all."

He compared PCI DSS to No Child Left Behind, the education reform law championed by former President George W. Bush. The law has been criticized by some who believe it has stifled innovation in education and focused too much on standardized testing. CSO Online

Why Most PCI Self-Assessments Are Wrong

Another fantastic article I found in the archives of Even Shcuman's StorefrontBackTalk on PCI compliance written by David Taylor... it gives me the willies!

Written by David Taylor

The reason that so many PCI self-assessments are wrong is that they focus on the mainstream business processes of the company. They often ignore a lot of “back-channel” or “just-in-case” practices that result in card data coming into the company not protected by the various PCI and other data security measures to protect more mainstream applications, data repositories and processes.

Here are 3 examples, all of which come from personal experience:  StoreFrontBackTalk

Some PCI Compliance Facts

What is PCI DSS? The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Essentially any merchant that has a Merchant ID (MID). It is important to note, the payment brands and acquirers are responsible for enforcing compliance, not the PCI council.

To whom does PCI apply? PCI applies to ALL organizations or merchants, regardless of size or number of transactions, that accepts, transmits or stores any cardholder data (including non profits).

PCI compliance deadline? All merchants that store, processes or transmit cardholder data must be compliant now.

What are the PCI compliance ‘levels’? All merchants will fall into one of the four merchant levels based on Visa transaction volume over a 12-month period.

Merchant Level Description

1 Any merchant -- regardless of acceptance channel -- processing over 6M Visa transactions per year. Any merchant that Visa, at its sole discretion, determines should meet the Level 1 merchant requirements to minimize risk to the Visa system.

2 Any merchant -- regardless of acceptance channel -- processing 1M to 6M Visa transactions per year.

3 Any merchant processing 20,000 to 1M Visa e-commerce transactions per year.

4 Any merchant processing fewer than 20,000 Visa e-commerce transactions per year, and all other merchants -- regardless of acceptance channel -- processing up to 1M Visa transactions per year.


Level 4 merchant: You will have to refer to your merchant bank for their specific validation requirements and deadlines. All deadline enforcement will come from your merchant bank



Does PCI apply if I only accept credit cards over the phone? Yes. All business that store, process or transmit payment cardholder data must be PCI Compliant.

I’m in Canada do I have to worry about it? Canada’s deadline has come and gone. Both Canadian and UK merchants are required to be PCI compliant.

Is PCI compliance expensive? No, but non-compliance can be catastrophic. Non-compliance doesn’t just result in lofty fines, credit card replacement and audit fees. Consider the loss of business reputation and revenue.

70% of the cost of non-compliance was due to the loss of revenue!


What are the PCI Compliance Fines?

• $3 to $10 per card for replacement costs
• $5,000 to $50,000 (or more) in compliance fines
• The payment brands may, at their discretion, fine an acquiring bank $5,000 to $100,000 per month for PCI compliance violations. The banks then pass the fines down to the merchant. The bank is likely to either terminate your business relationship or increase your transaction fees.

The average cost of a data breach for a Level 4 merchant averages $36,000 and can be as high as $50,000 (or more) for failure to meet PCI compliance.

What does PCI mean to you?

This week my attention has been dominated by one word, well six officially, but often narrowed down to six or even three letters – PCI.

To give it its full title it is the ‘Payment Card Industry Data Security Standard', and in my meetings this week at Gartner and other panel debates, the subject arose on several occasions. Now I will be the first to acknowledge that I do not know the ins and outs of PCI (as we will now call it), but thanks to the PCI DSS user group (see link) I do know that it is a set of complex regulations that all businesses taking credit card payments must adhere to.

The first debate over PCI is generally in regard to how much of a point the standard has, and how much it is enforced. An article published back in June gave the opinion that the PCI Council had ‘failed to adequately address consumer risk by not mandating end-to-end encryption as part of its requirement, allowing the use of compensating controls in lieu of encryption in order to spare those under PCI requirements from the expense of properly securing the data they were entrusted to protect'.

Paul Henry, security and forensic analyst at Lumension, who gave the opinion, claimed that the amount of data breaches witnessed had become all too commonplace, and that the bar should be raised to increase the minimum acceptable standards to become compliant in light of these many failures.

SC Magazine UK

Debit Or Credit? Neither

I stopped using my debit card altogether a couple of years ago out of an intense fear that I would never recoup the losses if my card was skimmed in the grocery-store line or compromised at TJ Maxx.

Now I casually slide my checkbook onto the card reader stand and perform that rare act of putting pen to paper while trying to avoid the annoyed stares of shoppers behind me in line who may lose a few seconds off their shopping time because I didn't use plastic.

But my check apparently isn't any safer. The Ponemon-Imperva study on PCI compliance report

released this week found that 55 percent of retailers and organizations who take credit cards don't bother securing their customers' Social Security numbers, driver's license numbers, and bank account details. And 79 percent of retailers surveyed had suffered at least one data breach.

Those aren't great odds.

Sure, even if you swipe your credit card at a retailer that's PCI-compliant, there's no guarantee your credit card won't get breached anyway. But more worrisome is the attitude of many of the retailers in the survey: most look at PCI as more of a "check-box" item than part of a strategic security initiative. If they're playing to the auditors, who's really minding the store and its customer data?

Then there are the opportunistic retailers. These companies are using PCI to parlay some other IT security purchases that they may not previously have had the funds for: "There's almost a dark side to this: they're putting things in the PCI basket that are really not PCI-critical and leveraging PCI for other security projects," says Brian Contos, chief security strategist at Imperva.

Dark Reading

The Future of PCI: 4 Questions to Answer

It's been an interesting year for the Payment Card Industry Data Security Standard (PCI DSS, or just PCI).

On one hand there were the Heartland Payment Systems (HPY) and Network Solutions data breaches, after which at least one industry analyst declared "It's stop pretending that PCI is working."

On the other, there is the State of Nevada, which has passed a new law requiring businesses to comply with PCI when collecting or transmitting payment card information.

In the middle, is a debate among payment card companies, banking institutions, merchants, industry groups and even congressional leaders, questioning the merit of the standard and all hinting at the same open question: What is the future of PCI?

PCI stakeholders are gathering this week for the 2009 PCI Security Standards Council Community meeting in Las Vegas, NV. Among the questions sure to be discussed at this conference:

1)What About End-to-End Encryption?

Following the announcement of the Heartland breach, company CEO Robert Carr called for end-to-end encryption efforts and acceptance of that standard by the payments industry. Heartland even has piloted such a program, but critics say this initiative has a long road ahead if it's to become an industry standard. This is likely to be a major topic for discussion this week and in the coming months.

2) Is Chip and PIN Viable?

In the wake of the year's bigger breaches, some PCI critics have called for U.S. adoption of the UK's chip and PIN security standard, which relies on smartcard technology to reduce point-of-purchase fraud. Alas, the solution is not as effective in online card not present (CNP) transactions - one of the fastest growing fraud schemes. Still, given discussion of chip and PIN at a congressional hearing earlier this year, the solution is likely to get significant consideration in the PCI debate.

3) What are PCI's Limits?

Gartner analyst Avivah Litan has been one of the more outspoken PCI critics, arguing that U.S. card issuers and the industry need to strengthen the core of card payment security. "Card fraud is getting out of control in many areas, and bank card fraud detection systems across the globe are struggling to keep up," Litan says.

Following the recent indictment of Albert Gonzalez for the Heartland breach, Litan said Litan asserts it's time for the U.S. card industry "to get on the bandwagon and upgrade payment card system security, and stop pretending that PCI is working."

Litan's statements will fuel the ongoing debate.

4) Where are the Lessons Learned?

The PCI debate has been riddled with contradictory statements. Following the Heartland breach, the company stated publicly that it was PCI-compliant at the time of the hack. But then Adrian Phillips, Visa's Deputy Chief Enterprise Risk Officer, countered: "We've never seen anyone who was breached that was PCI compliant."

Network Solutions likewise argues that it was PCI compliant when it was breached. But David Taylor, CISSP and founder of PCI Knowledge Base, says it's a mistake for anyone to equate "compliant" with "impossible to breach."

There is no way that a committee that has to consider what is "reasonable" and "affordable" to its members and the industry as a whole can possibly design a set of standards that can prevent one clever hacker from figuring out a way to break in, then sharing his/her hack with millions via the Internet, Taylor says.

One common refrain in PCI discussions this year has been that PCI compliance represents a point in time - not a permanent state of being. To ensure ongoing compliance, financial services firms and merchants need to engage in a detailed, ongoing review of service providers to better understand what is specifically being done to protect data at rest and in transit.

No doubt, the names Heartland and Network Solutions will come up frequently in the ongoing debate. The key is: What are the lessons learned from these incidents, and how will the payment card industry strengthen its standards?

The answers to those questions will shape the true future of PCI.
Bank Info Security

PCI Survey Finds Some Merchants Don't Use Antivirus Software

Consumers face a greater risk of losing control of their data when doing business with smaller retailers, as many haven't made investments to comply with the Payment Card Industry's Data Security Standard (PCI DSS), according to a new survey.

The survey, which covered 560 U.S. and multinational organizations, asked respondents a variety of questions about their investments and deployment of technology to comply with PCI DSS, which was introduced in 2005. It's an industry standard created by major credit card companies that's designed to protect customer payment data.

The survey found that 55 percent of organizations only secured credit card information but not other data such as Social Security and driver's license numbers or bank account details. Also, only 28 percent of smaller companies between 501 to 1,000 employees comply with PCI DSS. That compares with more than 70 percent of large merchants with 75,000 or more employees that claimed they're compliant.

"If you go the larger organizations to do business, you are more likely to be secure today," said Amichai Shulman, CTO for Imperva, which makes security software for businesses to comply with PCI DSS. Imperva commissioned the survey from Ponemon Institute, a company that conducts research into privacy and information security policy.

The prime reason that companies don't comply with PCI DSS is cost, Shulman said. "They don't go to the effort to be compliant because it's all or nothing, so they currently do nothing," Shulman said.

Larger companies find it somewhat easier to handle the costs, he said. On average, companies spend about 35 percent of their IT security budgets on PCI DSS compliance.

Payment card companies mandate compliance, and most merchants are supposed to be compliant by now, according to information on the PCI Security Standards Council's Web site.

The survey turned up some other disconcerting results. Around 10 percent of the respondents who said they were PCI DSS compliant said they weren't using basic security software such as antivirus, firewalls and SSL (Secure Sockets Layers), Shulman said.

PCI doesn't prescribe the use of specific software products but instead promotes practices and general advice, such as using a firewall and antivirus. In recent years, vendors have developed products to make the implementation of PCI DSS easier. Still, the result was surprising and indicative of perhaps continuing confusion or difficulty some businesses are having with PCI DSS.

"I would find it very hard to explain why I'm not using SSL as part of my PCI compliance," Shulman said. "It seems to me that there is too much room for misinterpretation of the requirement, and companies are abusing it."

PCI DSS is in the process of being updated, and the survey will be used as input. The PCI Security Standards Council, which was set up by major credit card companies in 2006, is collecting feedback through Oct. 31 on changes to a new version of the standard, due for release in September 2010.
PC World