evolve 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


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


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!


Risks Have Increased as Technology Changed


Unauthorized Users


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


Stolen Account Data Value


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.


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?



Cardholder Verification Number (CVV2)

Cardholder Verification Number (CVN)(CID/CVV2/CVC2)

CVV2

CVV


ProcessorGatewayService Provider

Cardholder

Merchant

PCI Relationship Matrix

Acquiring Bank

App Vendors

Acquiring BankIssuing Bank

Merchant Cardholder Environment


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


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


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


4

• Annual Self-Assessment Questionnaire

• Internet Facing Perimeter Systems

• Merchant• Optional support from

qualified vendor

• Network Scan Recommended

• Internet Facing Perimeter Systems



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


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



New Self Assessment Questionnaire (SAQ)

SAQ


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…


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

http://www.infomerchant.net/�


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


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


23

What’s One More Certification?

Payment ApplicationBest Practices[PABP]


Knowledge – Action = Negligence


QuestionsDonald Raleigh

(651) 628-4000

[email protected]

www.evolve-systems.com/paragon