Donald Raleigh The Mission Critical Aspects of PCI Compliance
Donald Raleigh
The Mission Critical Aspects of PCI Compliance
Copyright 2009 Evolve Systems®
Agenda
•Compliance Overview•Cyber Threats•Payment Card Overview•PCI Compliance•Controls Framework•Questions
PCI = Payment Card IndustryDSS = Data Security Standard
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1970-1980
1980-1990
1990-2000
2000-Present
The Regulatory Environment Represents a New Enterprise Challenge
Computer Security Act of 1987
EU Data Protection HIPAA FDA 21CFR Part 11 C6-Canada GLBA
COPPA USA Patriot Act 2001 EC Data Privacy Directive CLERP 9 CAN-SPAM Act FISMA Sarbanes Oxley (SOX) CIPA 2002 Basel II NERC CIP 02-09) CISP Payment Card Industry
(PCI) California Individual Privacy
SB1386 Other State Privacy Laws
(38)
Privacy Act of 1974 Foreign Corrupt Practice
Actof 1977
Compliance Trends
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State Privacy Laws
Businesses must establish basic information security programs
Businesses must proactively manage their confidential consumer information
Businesses must take steps to know when their defenses have been breached
In the event of an actual or suspected security breach businesses have a legal obligation to notify impacted consumers resulting in new security requirements
Compliant infrastructures are required!
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Risks Have Increased as Technology Changed
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Unauthorized Users
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Attack Vectors
• Virus Attack• Spyware (intentional and unintentional)
o Worms and Trojanso Image embedded Trojans
• Targeted attacks that exploit poor system configuration and vulnerabilities
• Targeted attacks against a "friendly" who either loses your data or passes along the attack
• Physical theft• System misuse by an authorized user
o Internal staffo Third parties
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Stolen Account Data Value
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DSW Shoe Warehouse customer database was hacked and 1.4 million records were stolen and records over $6.5 million reserve on 2005 financial statements.
Scary Bedtime Stories What is the cost of non-compliance
Other headlines….- TJ MAX causes several
states to introduce new legislation to protect cardholder data.
- Card Systems International forced to sell operations at a loss.
- Ongoing compromises are driving changes in the DSS to include dual factor authentication and wireless security.
FTC fines Choice Point $10 million for unfair business practices for failure to protect consumer data.
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Costs of a PCI Compromise
Notify Clients and Provide Privacy Guard
Fines and Penalties
Loss of Clients
Fraud liability (ADCR)
Reputation Loss
$50 x 10,000 = $500,000
$10,000 to $1 million
10,000 clients – 15% = 1,500 clients1,500 x $100 in fees = $150,000 in lost fees
1,000 accounts x $500 = $500,000
PRICELESS!
A hypothetical merchant compromises 10,000 accounts when a third party service provider has a server stolen. What is the potential financial impact?
PCI = Payment Card IndustryDSS = Data Security Standard
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Cardholder Verification Number (CVV2)
Cardholder Verification Number (CVN)(CID/CVV2/CVC2)
CVV2
CVV
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ProcessorGatewayService Provider
Cardholder
Merchant
PCI Relationship Matrix
Acquiring Bank
App Vendors
Acquiring BankIssuing Bank
Merchant Cardholder Environment
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Six Goals: Twelve Requirements – PCI DSS
Build and Maintain a Secure Network
1. Install and maintain a firewall configuration to protect cardholder data2. Do not use vendor-supplied defaults for system passwords and other
security parameters
Protect Cardholder Data 3. Protect stored cardholder data4. Encrypt transmission of cardholder data across open, public networks
Maintain a Vulnerability Management Program
5. Use and regularly update anti-virus software6. Develop and maintain secure systems and applications
Implement Strong Access Control Measures
7. Restrict access to cardholder data by business need-to-know8. Assign a unique ID to each person with computer access9. Restrict physical access to cardholder data
Regularly Monitor and Test Networks
10.Track and monitor all access to network resources and cardholder data11.Regularly test security systems and processes
Maintain Information Security Policy
12.Maintain a policy that addresses information security
The “Digital Dozen” The Payment Card Industry Data Security Standard
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The Mandate: Merchant Levels Defined
Level Merchant Classification Criteria
1
Visa & MasterCard: Any merchant-regardless of acceptance channel-that:
Processes over 6 million Visa or MasterCard transactions per year Has suffered a hack or an attack that resulted in an account data compromise Visa or MasterCard determines should meet the Level 1 merchant requirements Has been identified by any other payment card brand as Level 1
AMEX: Any merchant-regardless of acceptance channel-that processes over 2.5 million AMEXtransactions
2
Visa & MasterCard: Any merchant that processes 1 million to 6 million Visa or MasterCardtransactions, regardless of acceptance channel
AMEX: Any merchant-regardless of acceptance channel-that processes 50,000 to 2.5 millionAMEX transactions
3
Visa & MasterCard: Any merchant that processes 20,000 to 1 million Visa or MasterCard e-commerce transactions
AMEX: Any merchant-regardless of acceptance channel-that processes less than 50,000 AMEX transactions
4Visa & MasterCard: Any merchant that processes fewer than 20,000 Visa or MasterCard e-commerce transactions or processes fewer than 1 million Visa or MasterCard transactions, regardless of acceptance channel
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Compliance Validation Requirements
Level Validation Actions SCOPE Validated By
1• Annual On-Site Security
Audit - AND -• Authorization and
Settlement Systems• Independent Assessor or
Internal Audit if signed by Officer
• Quarterly Network Scan • Internet Facing Perimeter Systems
• Qualified Independent Scan Vendor
2 & 3
• Annual Self-Assessment Questionnaire
- AND -
• Any system storing, processing, or transmitting cardholder data
• Merchant• Optional support from
qualified vendor
• Quarterly Network Scan • Internet Facing Perimeter Systems
• Qualified Independent Scan Vendor
4
• Annual Self-Assessment Questionnaire
• Internet Facing Perimeter Systems
• Merchant• Optional support from
qualified vendor
• Network Scan Recommended
• Internet Facing Perimeter Systems
• Qualified Independent Scan Vendor
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Food Service Industry represents the majority of the compromises.
Retail Industry is the next largest industry seeing compromises.
52%
27%
4%
4%3%
3%2%
Food ServiceRetailEntertainmentTravelUniversityPayment ProcessorTelecomNon-Profit/NGOMediaGovernmentPetroleumMedicalConstruction
Case Analysis: Compromise by Industry
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Top PCI DSS Violations
#1 Requirement 12: Maintain a policy that addresses information security
#2 Requirement 3: Protect stored data
#3 Requirement 6: Develop and maintain secure systems and applications
#4 Requirement 10: Track and monitor access to network and card data
#5 Requirement 11: Regularly test security systems and processes
#6 Requirement 8: Assign a unique ID to each person with computer access
#7 Requirement 1: Install and maintain a firewall to protect cardholder data
Violations >50% Found During Forensic Investigations
Violations <50% Found During Forensic Investigations
Violations Found During Initial PCI DSS Audits
PCI = Payment Card IndustryDSS = Data Security Standard
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New Self Assessment Questionnaire (SAQ)
SAQ
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Visa Fine Schedule*(other card associations have different costs)
Data compromise or non-compliance with PCI requirements:
• First Violation -- Up to $50,000• Second Violation -- Up to $100,000• Third Violation -- At Visa’s discretion for more than two violations in 12
months
Merchants who store full-track data:• Initial penalty of $50,000• Thereafter Visa assesses fines up to $100,000 monthly until track data is
removed• Representative fine structure based on public information distributed by
Chase Paymentech. Actual fines to merchants may vary based on their acquirer.
* Your Fines May Vary…
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Assessment Scope Where is the card holder data?
Customer Production Environment
Acquiring BankWells Fargo, BoA, Chase
Admin Environment
Portal Access to Reconciliation Data (Charge Back / Sales Audit)
Transaction Servers or Payment GatewayTransaction Record & Archive
Data WarehousePayment Gateway and Transaction Database
Batch Settlement
Application ServersBack Office & Customer Svc
• Marketing
• Customer Service
• Ecommerce• Phone / Fax• Gift Cards
• Fraud• Accounting /
Administration
Pho
ne, F
ax, E
mai
l
Web Server(card not present)
POS Terminals(card present in stores and parking facilities)
Authorization
Document VaultsPaper records
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Phase Compliance Mandates Effective Date
I. Newly boarded merchants must not use known vulnerable payment applications, and VisaNet Processors (“VNPs”) and agents must not certify new payment applications to their platforms that are known vulnerable payment applications.
1/1/08
II. VNPs and agents must only certify new payment applications to their platforms that are PABP-compliant.
7/1/08
III. Newly boarded Level 3 and 4 merchants must be PCI DSS compliant or use PABP-compliant applications.
10/1/08
IV. VNPs and agents must decertify all vulnerable payment applications. 10/1/09
V. Acquirers must ensure their merchants, VNPs and agents use only PABP-compliant applications.
7/1/10
Oct 23 Announcement from Visa: “It is critical that merchants and agents do not use payment applications known to retain prohibited data elements and that corrective action is immediately taken to address any identified deficiencies because these applications are at risk of being compromised.”
New Visa Application Requirements
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Summary
• Assessment – vs - Audit
• Penalties for non-compliance is high but guidelines on “Assessment” procedures are marginal (sample size, evidence of control effectiveness, retention period, testing oversight)
• The testing procedures for each control activities are PRESCRIPTIVE .. Maintain evidence of controls
• Self Assessment Questionnaire must track to the environment
• Organizations may not understand the cardholder environment
• Reporting process depends on the acquiring bank
• More risks to manage than test procedures measure
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23
What’s One More Certification?
Payment ApplicationBest Practices[PABP]
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Knowledge – Action = Negligence
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QuestionsDonald Raleigh
(651) 628-4000
www.evolve-systems.com/paragon