CREDIT
Weak security opens door to hackers
By Jordan Robertson | ASSOCIATED PRESS
Every time you swipe your credit card and wait for the transaction to be approved, sensitive data including your name and account number are ferried from store to bank through computer networks, each step a potential opening for hackers.
And while you may take steps to protect yourself against identity theft, an Associated Press investigation has found the banks and other companies that handle your information are not being nearly as cautious as they could.
The government leaves it to card companies to design security rules that protect the nation’s 50 billion annual transactions. Yet an examination of those industry requirements explains why so many breaches occur: The rules are cursory at best and all but meaningless at worst, according to the analysis of data breaches dating to 2005.
It means every time you pay with plastic, companies are gambling with your personal data. If hackers intercept your numbers, you’ll spend weeks straightening your mangled credit, though you can’t be held liable for unauthorized charges. Even if your transaction isn’t hacked, you still lose: Merchants pass to all their customers the costs they incur from fraud.
More than 70 retailers and payment processors have disclosed breaches since 2006, involving tens of millions of credit and debit card numbers, according to the Privacy Rights Clearinghouse. Meanwhile, many others likely have been breached and didn’t detect it. Even the companies that had the payment industry’s top rating for computer security, a seal of approval known as PCI compliance, have fallen victim to huge heists.
Companies that are not compliant with the PCI standards—including one in 10 of the medium-sized and large retailers in the United States—face fines but are left free to process credit and debit card payments. Most retailers don’t have to endure security audits, but can evaluate themselves.
Credit card providers don’t appear to be in a rush to tighten the rules. They see fraud as a cost of doing business and say stricter security would throw sand into the gears of the payment system, which is built on speed, convenience and low cost.
That is of little consolation to consumers who bet on the industry’s payment security and lost.
It took four months for Pamela LaMotte, 46, of Colchester, Vt., to fix the damage after two of her credit card accounts were tapped by hack-
ers in a breach traced to a Hannaford Bros. grocery store.
LaMotte, who was unemployed at the time, says she had to borrow money from her mother and boyfriend to pay $500 in overdraft and late fees—which were eventually refunded— while the banks investigated.
“Maybe somebody who doesn’t live paycheck to paycheck, it wouldn’t matter to them too much, but for me it screwed me up in a major way,” she said. LaMotte says she pays more by cash and check now.
It all happened at a supermarket chain that met the PCI standards. Someone installed malicious software on Hannaford’s servers that snatched customer data while it was being sent to the banks for approval.
Since then, hackers plundered two companies that process payments and had PCI certification. Heartland Payment Systems lost card numbers, expiration dates and other data for potentially hundreds of millions of shoppers. RBS World- Pay Inc. got taken for more than 1 million Social Security numbers—a golden ticket to hackers that enables all kinds of fraud.
In the past, each credit card company had its own security rules, a system that was chaotic for stores.
In 2006, the big card brands—Visa, MasterCard, American Express, Discover and JCB International— formed the Payment Card Industry Security Standards Council and created uniform security rules for merchants.
Avivah Litan, a Gartner Inc. analyst, says retailers and payment processors have spent more than $2 billion on security upgrades to comply with PCI. And the payment industry touts the fact that 93 percent of big retailers in the U. S., and 88 percent of medium-sized ones, are compliant with the PCI rules.
Computer security experts say the PCI guidelines are superficial, including requirements that stores run antivirus software and install computer firewalls. Those steps are designed to keep hackers out and customer data in. Yet tests that simulate hacker attacks are required just once a year, and businesses can run the tests themselves.
“It’s like going to a doctor and getting your blood pressure read, and if your blood pressure’s good you get a clean bill of health,” said Tom Kellermann, a former senior member of the World Bank’s Treasury security team and now vice president of security awareness for Core Security Technologies, which audited Google’s Internet payment processing system.
“PCI compliance can cost just a couple hundred bucks,” said Jeremiah Grossman, founder of WhiteHat Security Inc., a Web security firm. “If that’s the case, all the incentives are in the wrong direction. The merchants are inclined to go with the cheapest certification they need.”
For some inspectors, the certification course takes just one weekend and ends in an open-book exam.
Security experts say there are several steps the payment industry could take to make sure customer information doesn’t leak out of networks.
Banks could scramble the data that travels over payment networks, so it would be meaningless to anyone not authorized to see it.
Another possibility: Some security professionals think the banks and credit card companies should start their own PCI inspection arms to make sure the audits are done properly. Banks say they have stepped up oversight of the inspections, doing their own checks of questionable PCI assessment jobs. But taking control of the whole process is far-fetched: nobody wants the liability.
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