October 26, 2006 by tim.

This week’s Information Week has an excellent overview of data breach and privacy legislation that is under consideration by both the House and Senate. One bill, HR 4127, the Financial Data Protection Act, is ready for a House vote when Congress reconvenes after the November elections. It would require organizations to protect personal data and provide nationwide notice in the event of a data breach.

Here are some of the other key bills:

HR 6163 - Federal Agency Data Breach Protection Act

HR 3997 - Data Accountability and Trust Act

S 2169 - Financial Data Protection Act

See my previous post for an overview of existing data breach legislation.

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October 25, 2006 by tim.

Visa, in conjunction with the US Chamber of Commerce, has published an alert that identifies the leading causes of data breaches. Full details can be found at the Chamber’s website. The five leading causes of card-related breaches are:

1) Storage of mag stripe data
2) Missing or outdated security patches
3) Use of vendor supplied default settings and passwords
4) SQL injection
5) Unnecessary and vulnerable services on servers

Also, the GreenSheet recently reported that Visa has increased its efforts to enforce compliance with PCI standards. The article states that all Level 1 merchants were required to validate compliance by Sept. 30, and that there are approximately 20 level 1 merchants that are currently subject to fines ranging from $10,000 to $100,000 PER MONTH for failure to comply.

In the October issue of Transaction World magazine, Michael E. Smith, Senior Vice President of Enterprise Risk and Compliance for Visa USA, has published an article entitled Targeting the Main Source of Cardholder Data Breaches. He cautions that “…some payment applications may inadvertently store prohibited, sensitive cardholder information,” creating a situation where merchants don’t even realize that they have a security risk. He also advises that merchants should check the list of PABP (Payment Application Best Practices) validated products on Visa’s site at www.visa.com/cisp. And he emphatically states that “Visa expects all payment application vendors to adhere to the PABP.” This article is one of the most direct declarations that I have seen of Visa’s intent to make PABP mandatory for all payment applications.

Posted in Payment Card Industry / Credit Card Security | No Comments »

October 20, 2006 by tim.

Given the complexity of Payment Card Industry (PCI) compliance, many organizations may conclude that complying with the PCI DSS will then ensure compliance with the myriad of state and federal laws and regulations that address privacy and data security (see Payment Card Industry Compliance and Data Breach Laws). Dr. Heather Mark addresses the relationship between PCI compliance and privacy in this month’s edition of Transaction World magazine.

She specifically addresses the legal requirement to provide a Notice, which is usually covered in the Privacy Policy on a website. She says that future articles will “attempt to answer the questions surrounding the intersection of privacy and security.” This should be a very helpful source of information for organizations trying to navigate these treacherous waters.

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October 13, 2006 by tim.

There is a great article in today’s edition of InfoWorld that talks about how the new credit card security requirements will have “repercussions across the entire high-tech industry,” according to writer Ephraim Schwartz. He specifically talks about how Visa’s Payment Application Best Practices (PABP) ”will quickly turn into de facto VISA requirements, as users of the software, such as merchants or card processors, face stiff fines for using noncompliant software.”

As a merchant, Visa mandates that it is your responsibility to use software applications that are PABP compliant. In fact, your merchant services agreement likely has already been revised with such language. However, simply choosing an application from the list does not satisfy the PCI Data Security Standards — the entire environment must be compliant, not just the application. This means that the server and entire network on which the payment application resides must comply with all of the PCI DSS.

Alternatively, merchants can outsource their payment processing to a Service Provider that has been recognized as fully PCI compliant by being included on Visa’s List of Compliant Service Providers.

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October 6, 2006 by tim.

Everybody knows that hackers focus their efforts on large e-commerce sites because of the huge treasure trove that these sites represent, right? Hackers aren’t going to waste their time going after small, virtually unknown e-commerce sites, are they? While this might be the conventional wisdom, Brian Krebs has a very interesting article in the 9/28/06 edition of The Washington Post that presents a totally different picture.

The article, titled ID Thieves Turn Sights on Smaller E-Businesses, describes how hackers penetrated a small e-commerce site and posted stolen credit card information “into an online forum that caters to criminals engaged in credit card and identity theft.” Mr. Krebs also exposes the sometimes false sense of security that is conveyed by security seals on sites.

I highly recommend this article as an expose’ of how this dark world operates. Certainly, it is good for a site to be tested by a security scanning vendor. However, as Mr. Krebs points out, this is not foolproof, and he cites examples of how hackers penetrated sites that were thought to be secure. Here is one particularly revealing line from Mr. Krebs’ article: “Jason Lam, who teaches a course on securing Web sites for the SANS Institute, a Bethesda, Md.-based security research and training group, estimated that Web site scanning services in most cases only identify about 60 percent of a Web site’s potential security problems.”

This article really exposes the need for all merchants and service providers to become fully compliant with the Payment Card Industry (PCI) Data Security Standard (DSS). Many merchants and service providers claim that they are secure because they use SSL, or because they pass all the tests from a scanning vendor, or because they have a firewall. Yes, these are all good measures, but they are just a small part of the rigorous requirements of the PCI DSS.

As a merchant, particularly a small- to medium-sized e-commerce site, the easiest way to comply with the PCI requirements is to avoid them altogether by outsourcing to a PCI-compliant service provider. But don’t just take their word for it — the only way to know if a service provider is PCI compliant is to find them in Visa’s official List of CISP Compliant Service Providers.

Posted in Payment Card Industry / Credit Card Security, Electronic Payment Security - General | No Comments »

October 3, 2006 by tim.

As if complying with the Payment Card Industry requirements, including the newly revised Data Security Standard, were not already challenging enough, any entity that stores sensitive personal information must also comply with a myriad of regulations such as data breach laws. About.com has an excellent section about identity theft and data breach disclosure.

Currently, there is no federal law that directly addresses data breaches, but numerous states have enacted their own legislation. Unfortunately, these laws are very diverse, with little consistency on even fundamental components like the definitions of key terms such as breach, personal information, and risk. Furthermore, since these laws protect residents of each of these states, an entity that stores personal information is subject to that resident’s state laws, even if the entity does not have a location in that state.

One of the best sources that I have found for concise information about state laws regarding data breaches is the Security Breach page on the VigilantMinds site. They provide an executive summary of state legislation as well as a matrix that compares key provisions of all of the state laws. In addition, they provide links to the actual legislation of each state. While this is certainly not a substitute for seeking legal advice on this matter, their site can save you and possibly even your attorney a lot of time.

Earlier this year, a draft bill was debated by the House of Representatives. The bill was called the Data Accountability and Trust Act (DATA), and if passed, it would have preempted all existing state laws. For now, the bill has been tabled. Dr. Heather Mark published an article entitled The Ever Changing Challenge of Compliance that gives an excellent overview of the provisions of this bill.

If your organization stores personal information, I hope that the links above will help you better understand the maze of regulations related to data breaches.

Posted in Data Breach Regulations, Payment Card Industry / Credit Card Security | No Comments »