Credit Card Security for Small Business (Pt. 1)
Staples recently suffered a data breach that resulted from malware infecting its point-of-sale (“POS”) systems at several stores. This should not be surprising, since a recent study by Verizon showed that a significant portion of data breaches are the result of POS system intrusions. So what’s a business to do?
Many small businesses avoid this problem by refusing to accept credit cards and only accepting cash or checks. But that’s not a solution for businesses that wants to accept credit cards. For these merchants, the only realistic solution is to comply with the Payment Card Industry Data Security Standards (“PCI DSS”).
PCI DSS is administered and managed by the Payment Card Security Standards Council (PCI SSC) that was created by the major payment card brands (Visa, MasterCard, American Express, Discover and JCB). PCI DSS is a rigorous set of security requirements (“Requirements”) designed to ensure that all companies that process, store or transmit credit card information maintains a secure environment in order to protect cardholder data. “Cardholder data” is any personally identifiable data associated with a cardholder, such as an account number, expiration date, name, address, social security number, etc.
Every merchant that accepts credit cards agreed to abide by the PCI DSS as part of their merchant account processing agreement. See e.g., NPC Merchant Processing Agreement at § 12.B.ii, 14.O. Failure to adhere to these requirements can lead to stiff penalties, an exorbitant PCI DSS non-compliance fee, and/or increased transaction fees or a termination of the right to accept credit cards.
If a security incident, such as a data breach, occurs, a business is potentially liable for the following charges:
- Data Security Fine– Up to $500,000 fine per security incident.
- PCI Non-Compliance Fines– Up to $50,000 per day for non-compliance with published standards.
- Card Replacement Fees– $3 – $10 per card x total number of cards compromised.
- Refund Fees– Potentially held liable for all fraud losses incurred from compromised account holders.
These penalties are assessed by credit card brands, acquiring bank, and the merchant’s credit card processor, and are in addition to other losses, such as harm to business reputation, that can result from a data breach, as I discussed in an earlier blog post.
To avoid this parade of horribles and decrease the likelihood that cardholder data will be lost, small to mid-sized businesses need to regularly comply with PCI DSS requirements.
Compliance with PCI DSS is an ongoing process and typically involves the following four steps:
- PCI DSS Scoping– Determines what organization system components and computer networks are in scope for PCI DSS assessment.
- Assessing– Exam and assess the compliance of system component and computer networks in scope following the testing procedures for each PCI DSS Requirement.
- Reporting– PCI DSS Qualified Security Assessor (QSA) and/or business submits required documentation to validate compliance with PCI DSS (e.g., Self-Assessment Questionnaire (SAQ) or Report on Compliance (ROC)), including documentation of all compensating controls.
- Clarifications– QSA and/or business clarifies ROC and/or SAQ, if need at the request of the acquiring bank, processor or payment card brand.
The first two steps will be discussed in this week’s blog post and the last two will be discussed next week.
I. SCOPE OF PCI DSS REQUIREMENTS
The first step of PCI DSS is to accurately determine the scope and breadth of the environment in your business regarding credit cardholder data. The Cardholder Data Environment (CDE) is composed of all people, processes and technology that handle or have access to cardholder data or sensitive authentication data. The scoping process includes identifying all system components that are located within or connected to the CDE and can include the following:
- Network devices (wired and wireless)
- Virtualization components, such as virtual machines, virtual switchers/routers, virtual appliances, virtual applications/desktops, and hypervisors.
Scoping needs to occur at least annually and prior to the annual assessment for PCI compliance validation. An organization must identify all locations and flows of cardholder data to ensure that all applicable parts of the CDE are included in the scope of PCI DSS assessment.
One helpful way to reduce the scope of PCI DSS assessment is to use segmentation, which isolates cardholder data environment from the remainder of your organization’s network. Reducing the scope of PCI DSS assessment can lower the cost and difficulty of maintaining PCI DSS controls and reduce the risk for you business.
To be outside the scope for PCI DSS, a system component must be properly isolated (segmented) from the CDE, such that the security of cardholder data would not be compromised if the security of the out-of-scope component was compromised. More details on segmentation are contained in the Requirements at p. 11 and in Appendix D.
Use of Third Party Service Providers/Outsourcing
Another helpful way to reduce the scope of your PCI DSS assessment is by using a third-party to store, process or transmit cardholder data on your behalf or to manage CDE components. If you use third party service providers, however, you must clearly identify the specific roles and responsibilities of the service provider with respect to cardholder data and PCI DSS. PCI DSS specifically calls for developing and maintaining a responsibilities matrix for each service providers. See id. at Requirement 2.2.1.
Many service providers have these matrices available to describe their standard service to PCI merchants. To obtain one, simply ask for the “PCI Responsibilities Matrix.” If your service provider does not have any idea what you are talking about, it’s time to find a new service provider. PCI DSS allows you to outsource much of the handling of cardholder data to third-parties, but you cannot avoid responsibility for ensuring that the data is kept secure and complying with PCI DSS.
II. PCI DSS ASSESSMENT
The second step is to assess whether your business’s CDE complies with the 12 PCI DSS Requirements and the accompanying procedures contained in the Requirements. There are two main ways to fulfill your assessment obligations:
- Hire a PCI DSS QSA
Hiring a PCI DSS QSA
PSI DSS QSA’s are organizations that have been certified by the PCI Security Standards Council to assess compliance with PCI DSS standards. QSA’s perform data security assessments, make recommendations, and certify compliance. Hiring a QSA will save you the time it would take to perform your own PCI DSS assessment and provide you with the peace of mind that the job was done properly.
The big downside to hiring a QSA is cost. QSA fees are generally quite expensive. One quote charged a base $5,000 fee plus $200 for every hour. Additional costs may include the equipment/software to fix whatever problems the QSA finds, which is also costly.
If you’re interested in hiring a QSA, here is a list of PCI DSS certified QSA companies.
Another way to assess your CDE for PCI DSS compliance is to do-it-yourself. This may seem like a daunting task but it can be done and may not be that difficult depending on the complexity of your organization and how you process cardholder data. The PCI SSC website provides a helpful section here that is geared towards helping small merchants comply with the Requirements.
The website also provides a helpful Quick Reference Guide that summarizes the Requirements. It is a must-read for any business that accepts credit cards and is considering conducting their own PCI DSS assessment. The Guide is a fairly readable 40 pages with helpful tips and explanations.
Here’s a brief overview of the Requirements and some tips for assessing in order to give you an idea of about whether self-assessment is feasible. This overview is not sufficient to assess whether your organization’s CDE complies with the Requirements. To conduct your assessment, you need to review the Requirements and follow the procedures for assessment.
Requirement 1: Install and Maintain a Firewall Configuration to Protect Cardholder Data
This Requirement is fairly straightforward and easy to implement. A firewall should be installed on any network, computer or device that is part of your CDE and contains or accesses cardholder data. For most small businesses, this means ensuring that your PC’s and network have a firewall. Most operating systems come with some sort of security package that includes a firewall. Just make sure that you regularly check to see that the firewall is working, and update it as necessary. If you don’t have a firewall, look into a commercial firewall, such as Symantec, to install on your computer and protect your network.
Requirement 2: Do Not Use Vendor Supplied Default Passwords
This Requirement is also fairly straightforward and easy to implement. The easiest way for a hacker to access your internal network is to try vendor default passwords or default system software settings in your payment card infrastructure. Far too often, merchants do not change default passwords or settings when hardware or software is deployed.
Don’t let this happen to you! Change your vendor supplied passwords and system settings immediately. Follow these Microsoft Tips for Creating a Password when choosing a new password or use this password generator.
Requirement 3: Protect Stored Cardholder Data
As a general rule, cardholder data should not be stored unless it is absolutely necessary to meet the needs of your business. Sensitive data on the magnetic stripe or chip must never be stored.
If your business stores the primary account number associated with a credit card, it must be made unreadable through encryption or other technological measures. This can get very expensive and risky, so consult with a QSA to ensure compliance with PCI DSS. Best practice, however, is not to store any cardholder data.
Requirement 4: Encrypt Transmission of Cardholder Data across Open Public Networks
Cybercriminals may be able to intercept transmissions of cardholder data over open public networks, so it is essential to prevent their ability to view this data. Encryption renders transmitted data unreadable by an unauthorized person.
If you accept credit card data on your website, then you should obtain an SSL Certificate. A SSL certificate ensures than any sensitive data transmitted through your website is encrypted. One place to use a SSL is on a payment page during checkout. There are plenty of SSL Certificate vendors out there, so choose one that’s reputable.
If credit card data is transmitted over a wireless network, your wireless router should be password-protected and encrypted. This is fairly easy to do and your wireless router should have instructions about how to password protect and encrypt your router. Encrypt your wireless router with the industry standard IEEE 802.11i (WPA2) and not WEP, which is no longer accepted as a security control by PCI DSS.
Requirement 5: Protect systems against malware and regularly update anti-virus software
This is also a no-brainer and easy to do. Use anti-virus software on all systems, such as PCs and servers, commonly affected by malicious software. This anti-virus software should be kept current, perform periodic scans, and generate audit logs that need to be retained according to PCI DSS Requirement 10.7. Make sure that the anti-virus mechanisms are continuously running and cannot be disabled or altered by users.
Requirement 6: Develop and Maintain Secure Systems and Applications
Security vulnerabilities in systems and applications allow criminals to access cardholder data. Some of these vulnerabilities are eliminated by using PCI approved PIN transaction security devices (i.e. PIN pads and credit card terminals) and PCI validated POS (Point-of-Sale) & payment gateway software. Check the links above to make sure your current security device is compliant and your current software is validated. If not, both should be upgraded. Regularly install all vendor-provided updates, software and security patches to maintain compliance.
Requirement 7: Restrict Access to Cardholder Data
Cardholder data should only be accessed by authorized personnel and not by everyone in your company. Put systems and processes in place to limit access based on need to know and according to job responsibilities. Janitorial staff that cleans your offices should not be permitted to have access to cardholder data!
Requirement 8: Identify and Authenticate Access to System Components
Assign a unique identification (ID) to each person with access to cardholder data and don’t allow sharing of ID’s. You want to be able to trace all activities relating to cardholder data on your system to known and authorized users. If there is a problem, you will be able to determine and isolate the source in order to prevent additional difficulties. If an employee with authorized access gets terminated, lock out their ID and prevent them for continuing to access cardholder data.
Requirement 9: Restrict Physical Access to Cardholder Data
Any physical access to data or systems that house cardholder data provides an opportunity for a person to access or remove devices, data, systems or hardcopies. To minimize this risk, restrict access to appropriate personnel and develop procedures to ensure that only appropriate personnel have access to cardholder data.
One way to do this is through the use of ID cards that only allow certain employees to have access to certain areas. Visitors should only be allowed access to certain locations, such as the front of a cash register, and not be allowed to view cardholder data. Furthermore, all media containing cardholder data should be locked in a secure location that only authorized personnel can access.
Requirement 10: Track and Monitor All Access to Network Resources and Cardholder Data
Organizations must also track and monitor all access to cardholder data and related network resources. Logging mechanisms and the ability to track user activity are critical for effective forensics and vulnerability management, and a merchant must ensure the presence of logs that allows thorough tracking and analysis in the event something goes wrong and cardholder data is improperly accessed.
Requirement 11: Regularly Test Systems
An organization must also have their system scanned for internal and security vulnerabilities by an Approved Scanning Vendors (ASVs). ASVs are organizations that validate adherence to certain PCI DSS requirements by performing vulnerability scans of merchants and service providers.
Internal and external vulnerability scans are conducted in a similar fashion. Both scans are automatically administered via a computer program and an Internet connection, but one program usually cannot simultaneously conduct both scans. An external vulnerability scan looks for holes in your network firewall(s), where malicious outsiders can break in and attack your network. By contrast, an internal vulnerability scan operates inside your business’s firewall(s) to identify real and potential vulnerabilities inside your business network. Internal scans may be performed by internal staff, but all external scans must be performed by ASVs for PCI DSS compliance. Scans must be performed as needed, until passing scans are obtained.
To comply with PCI DSS, your business needs to pass an initial internal and external scan, and then pass 4 consecutive quarterly scans in subsequent years. As part of these scans, regularly check PIN entry devices and PCs to make sure no one has installed rogue software or “skimming” devices. Talk to your ASV to make sure that they are checking for this and for tips about how to monitor yourself.
Requirement 12: Maintain a Policy that Addresses Information Security for all Personnel
Your organization must also develop and maintain an information security policy that informs employees of their expected duties related to security. All employees should be aware of the sensitivity of cardholder data and their responsibilities for protecting it. This policy should be reviewed annually and updated when the environment changes.
That’s it for this week. Thanks for reading and please let me know if you have any questions. Check back next week for the last two steps that need to be taken in the process of complying with PCI DSS.