Half of organisations exposing customers to payment fraud – Verizon

Verizon today released its 2017 Payment Security Report (PSR), which reveals that just under half of global organisations fail to comply with the security standards laid out by the Payment Cards Industry to ensure customer payment data is protected.

By failing to comply with the PCI DSS, organisations are putting consumers at increased risk of payment fraud. In one recorded example, a hotel was found to be storing almost a decade’s worth of receipts, containing full, unmasked card numbers next to its laundry room. Payment security isn’t just a trivial box to tick, but a serious issue that businesses need to address in order to keep customers safe.

With cybercrime on the increase, payment card security is increasingly a focus for companies and consumers alike. The Payment Card Industry Data Security Standard (PCI DSS) is there to help businesses that take card payments protect their payment systems from breaches and theft of cardholder data.

>See also: Data breaches becoming more complex, pervasive and damaging – Verizon

The findings from the Verizon’s report demonstrate a link between organisations being compliant with the standard, and their ability to defend themselves against cyber attacks.

Of all payment card data breaches Verizon investigated, no organisation was fully compliant at the time of breach, and showed lower compliance with 10 out of the 12 PCI DSS key requirements.

Overall PCI compliance has increased amongst global businesses, with 55.4% of organisations Verizon assessed passing their interim assessment in 2016. This is an increase from 2015, when only 48.4% of organisations achieved full compliance during their interim validation. This means that nearly half of retailers, restaurants, hotels and other business that take card payments are still failing to maintain compliance from year to year.

“There is a clear link between PCI DSS compliance and an organisation’s ability to defend itself against cyberattacks,” comments Rodolphe Simonetti, global managing director for security consulting, Verizon.

“Whilst it is good to see PCI compliance increasing, the fact remains that over 40% of the global organisations we assessed – large and small – are still not meeting PCI DSS compliance standards. Of those that pass validation, nearly half fall out of compliance within a year — and many much sooner.”

Key insight and real-life examples into business sector compliance

According to the report IT services industry achieved the highest full compliance of all key industry groups studied. Globally, about three fifths (61.3%) of IT services organisations achieved full compliance during interim validation in 2016, followed by 59.1% of financial services organisations (which includes insurance companies), retail (50%) and hospitality (42.9%).

>See also: Cyber espionage and ransomware attacks are on the increase – Verizon

The 2017 PSR also flags the compliance challenges faced by specific business sectors including:
• Retail: security testing, encrypted data transmissions and authentication.
• Hospitality and travel: security hardening, protecting data in transit and physical security.
• Financial Services: security procedures, secure configurations, protecting data in transit, vulnerability management and overall risk management.

Real-life examples highlight situations where compliance controls are not followed. For example – a financial services organisation seeking exemption from the Wi-Fi requirements of PCI DSS was surprised to learn that it did in fact have a wireless network operating in its building – this lack of knowledge causing it to fail.

The IT admin had got tired of traipsing from the server room in the basement to the IT department on the third floor, and so had installed a router to access the servers from his desk.

Mind the ‘control gap’ – key to compliance sustainability

When looking at the PCI controls that companies would be expected to have in place (such as security testing, penetration tests etc), the report found an increased ‘control gap,’ meaning that many of these basics were absent. In 2015, companies failing their interim assessment had an average of 12.4% of controls absent; this has increased to 13% in 2016.

Simonetti continues, “It is no longer the question of ‘if’ data must be protected, but ‘how’ to achieve sustainable data protection. Many organiSations still look at PCI DSS controls in isolation and don’t appreciate that they are inter-related – the concept of control lifecycle management is far too often absent. This is often the result of a shortage of skilled in-house professionals – however, in our experience, internal proficiency can be dramatically improved with lifecycle guidance from external experts.”

>See also: Enterprise IT leaders demand more stringent cyber security from suppliers

The 2017 PSR offers five key guidelines to assist with control lifecycle management:

1. Consolidate for ease of management – Adding more security controls is not always the answer – the PCI DSS Standard already contains numerous interlinked data protection standards and regulations. Organisations should be able to use this to consolidate controls, making them easier to manage overall.
2. Invest in developing expertise – Organisations should invest in their people to develop and maintain their knowledge of how to enhance, monitor and measure the effectiveness of controls in place.
3. Apply a balanced approach – Companies need to maintain an internal control environment that is both robust and resilient if they want to avoid controls falling out of compliance.
4. Automate everything possible – Applying data protection workflow and automation can be a huge asset in control management – but all automation also needs to be frequently audited.
5. Design, operate, and manage the internal control environment – The performance of each control is inter-linked. If there is a problem at the top, this will impact the performance of the controls at the bottom. It is essential to understand this in order to achieve and maintain an effective and sustainable data protection program.

>See also: UK’s critical infrastructure ‘skipping basic cyber security checks’

Troy Leach, chief technology officer for the PCI Security Standards Council concludes that the “report highlights the challenges organisations have to consistently maintain security controls on an ongoing basis, leaving their cardholder data environments vulnerable to attack. This trend was a key driver for changes introduced in PCI Data Security Standard version 3.2., which focus on helping organisations confirm that critical data security controls remain in place throughout the year, and that they are effectively tested as part of the ongoing security monitoring process.”


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Nick Ismail

Nick Ismail is a former editor for Information Age (from 2018 to 2022) before moving on to become Global Head of Brand Journalism at HCLTech. He has a particular interest in smart technologies, AI and...