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After Target, Neiman Marcus breaches, does PCI compliance mean anything?

Security failures at companies certified as PCI compliant suggest problems in standards and implementation

By Jaikumar Vijayan, Computerworld
January 24, 2014 04:51 PM ET

Computerworld - The recent data breaches at Target and Neiman Marcus have once again shown that compliance with the Payment Card Industry Data Security Standard (PCI DSS) is no guarantee against an intrusion.

What's unclear is whether the problem lies in the standard itself, or the manner in which it is implemented and assessed.

Neiman Marcus on Thursday became the latest company to suggest that PCI compliance had brought it little security against a major intrusion.

In a letter to U.S. Sen. Richard Blumenthal (D-Conn.) explaining the recent breach that exposed 1.1 million payment cards, Neiman Marcus CIO Michael Kingston claimed the intrusion happened even though the company had security measures that exceeded PCI standards.

Target, which last month disclosed a data breach that exposed credit card data on 40 million people, is also believed to have been PCI compliant at the time of the intrusion.

Several other companies that have suffered major data compromises in recent years have also claimed they were compromised despite being certified as PCI compliant.

Security analysts and researchers have differing takes on what might be going on.

Visa, MasterCard, American Express and other major credit card associations established PCI several years ago to get companies to adopt a set of security controls for handling credit and debit card data. Over the years, the retail industry in particular, is believed to have spent billions of dollars implementing PCI requirements and billions more in mandatory third-party compliance assessments.

That companies like Target and Neiman Marcus were compromised in such spectacular fashion despite adhering to PCI has vexed many.

The breaches "highlight weaknesses in PCI and in the security industry," said Avivah Litan, an analyst with research firm Gartner. Nothing in the PCI standard, for instance, would have helped Target detect and block the intrusion before it happened, according to Litan.

"PCI does mandate checking for malware but none of the typical anti-malware products could find the Target malware, and PCI doesn't mandate next-generation anti-malware security that's starting to emerge," she said.

Some of the problems may have to do with the manner in which compliance is assessed, Litan said. Most assessments are done using previously known attack vectors and threats. Companies are not being assessed for their readiness in dealing with new threats. "That's why we need a new paradigm and stronger security inside the payment system," Litan said.

James Huguelet, an independent PCI consultant, said the biggest problem with the PCI standard is that it doesn't require companies to encrypt data in motion. While the standard has requirements for encrypting data at rest, there is no such requirement for data in action during the entire transaction processing chain.

"This leads to many points along the path of an active transaction where criminal malware can 'spy' on the information as it passes by which is what appears to have occurred at Target," Huguelet said. The best approach is to require that all card holder data be encrypted at the point it is swiped all the way until it reaches the merchant's bank for processing.

Originally published on Click here to read the original story.

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