Report: PCI Noncompliance Common Among Companies That Suffer Payment Card Breaches

Retailers that have suffered payment card data breaches in recent years have often noted that the compromise occurred even though they were certified as compliant with the requirements of the Payment Card Industry (PCI) data security standard.

The Payment Card Industry Data Security Council, which administers the standard, has flatly rejected such claims, arguing that companies that fully comply cannot be breached. Therefore, it states, if a company is indeed breached, it could not have been PCI compliant.

Empirical Support

Circular as that argument might sound, it appears to have some empirical support. Verizon Enterprise Solutions is in the process of finishing a report on the relationship between compliance with the standard and data breaches at retailers, restaurants and other organizations that rely heavily on payment card transactions.

Though the full 2015 PCI report is due in February, preliminary results show that not a single breached company in the study fully complied with the standard at the time of the incident. Verizon’s report is based on a review of three years’ worth of data gathered from compliance assessments conducted by the company’s team of assessors for large firms in more than 30 countries.

“The initial glance at the data suggests that many companies fall out of compliance once it’s achieved,” Verizon noted in a statement announcing the preliminary findings. “In fact, fewer than one-third were still fully PCI-compliant less than a year after being validated” for compliance. The results show that companies that were breached were noncompliant, Verizon said.

PCI Compliance Challenges

The report identified two areas in which companies appear to have a particularly difficult time remaining compliant: firewalls and testing security systems and processes.

The results show that organizations need to change the way they approach security, according to Rodolphe Simonetti, director of compliance and governance at Verizon Enterprise Solutions.

“Businesses need to adopt a model that we call ‘resilience,’ which means they must accept they can never be fully secure,” he said. “There is no silver bullet for data protection.”

For the Security Council, the results validate its position that breaches only happen to companies that do not fully comply with the standard. However, they also reflect some of its shortcomings and the challenges involved in staying compliant, Avivah Litan, an analyst at Gartner, said in an interview.

Moving Target

Since at least 2006, many companies that have suffered data breaches have insisted they were certified as being compliant with requirements just before the breach, or even when it was happening, Litan said. That reflects both the subjectivity involved in the compliance assessment process and the fact that controls required by the standard alone are insufficient to protect against a breach.

“PCI is not black and white; it’s gray. A lot of [compliance] decisions are subject to the assessor’s opinion,” she said.

In other words, a company certified as being compliant by one assessor may not earn that same certification from another. The results also show just how much of a moving target compliance can be, according to Litan. Certified companies can often quickly fall out of compliance merely by adding new servers or software to their network.

The payment card standard specifies a set of high-level security controls that protect payment card data from being compromised. This standard applies to all companies that accept credit and debit card payments. However, compliance requirements vary. For instance, credit card associations such as Visa and MasterCard classify companies that handle over 6 million payment card transactions as Level 1 merchants, which have higher compliance requirements than companies lower down the stack.

PCI-covered entities that suffer data breaches can face stiff fines and other penalties if they were not compliant at the time of the breach.

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Jaikumar Vijayan

Independent Journalist & Tech Content Creation Specialist

Jaikumar Vijayan is an award-winning technology journalist with nearly 25 years of experience in IT trade journalism....