Congress Presses Credit Card Companies On PCI Failures

The Payment Card Industry (PCI) standard came under scrutiny yesterday on Capitol Hill, with a House subcommittee panel making clear its concerns that PCI has fallen short of its promises. In a hearing on whether PCI actually reduces cybercrime, the House Subcommittee on Emerging Threats, Cybersecurity, and Science and Technology warned credit card company representatives that PCI needs to be either revamped or augmented with federal laws.

"I do not believe the PCI standards are worthless -- in the absence of other requirements, they do serve some purpose. But I do want to dispel the myth once and for all that PCI compliance is enough to keep a company secure," said Rep. Yvette D. Clarke (D-N.Y.), subcommittee chair. "It is not, and the credit card companies acknowledge that."

Rep. Bennie Thompson (D-Miss.), chair of the Homeland Security Committee, said he was concerned that credit card companies were trying to "shift risk" of fraud and the associated costs to the retailers rather than truly improving their "product and procedures."

"The payment card industry's effort to shift risk appears to have contributed to our current state of insecurity, and I am concerned that as long as the card industry is writing the standards, we will never see a more secure system," Thompson said.

Retailers shoulder heavy costs with PCI, with large merchants spending as much as $18 million a year, Clarke said. And PCI compliance -- as shown in both the Hannafords and Heartland Systems data breaches -- doesn't guarantee the retailer won't get hacked, she said.

"Despite what the credit card companies say, for millions of small and large businesses out there, the PCI standards are the ceiling and not the floor. The bar has to be raised," Clarke said, noting that better data encryption and more regular updates to PCI, for instance, are needed.

Meanwhile, Joseph Majka, head of fraud control and investigations for Visa, said no fully PCI-compliant organization has suffered a data breach. He noted that no standard that guarantees security exists, either: "Visa recognizes that no set of standards can provide an absolute guarantee of security in a changing world, and PCI DSS is not an exhaustive list of all the security practices that may be effective to safeguard card data," Majka said.

He noted that securing customer data is "a shared responsibility."

Retailers, however, have argued that they shouldn't have to store credit card data, anyway, and the National Retail Federation echoed that sentiment in its testimony: "As I mentioned, all of us -- merchants, banks, credit card companies, and our customers -- want to eliminate credit card fraud. But if the goal is to make credit card data less vulnerable, the ultimate solution is to stop requiring merchants to store card data in the first place," said Dave Hogan, senior vice president and chief information officer for the National Retail Federation.

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