The holidays are just around the corner -- a time for decorations, dusting off
the good china and, of course, the shopping. Though it's meant to be the season
for giving, a major concern for holiday shoppers is the taking. The
more spending consumers do, the more opportunity exists for criminals to steal
credit information and have their own holidays.
Its crucial for consumers to protect their own personal information,
but on the other side of the coin, what are retailers doing to help ensure credit
and debit transactions are secure? In 2005, VISA International, MasterCard International
Inc., American Express Co., Discover Financial Services LLC and JCB banded together
to draft the Payment Card Industry (PCI) Data Security Standard (DSS), a mandate
for merchants to protect customer account data at various points during the
payment process. PCI-DSS is not a law or set of government regulations. Instead,
it is an industry standard that retailers and payment card service providers
must meet in order to stay compliant with their payment card company contracts.
As of September 30, 2007, all Level 1 merchants, those with more than six million
credit card transactions annually, were required to meet PCI standards. The
next big deadline is December 31, 2007, when Level 2 merchants, those with 1
to 6 million credit card transactions annually, must comply. However, a lot
of companies (more than half of large, affected retailers) still do not adhere
to PCI's best practices.
This article will explain how companies can best meet PCI-DSS standards, and
make credit card payments more secure and worry-free for consumers.
Money, money, money
Never underestimate the dangers involved in paying by credit card -- for consumers,
retailers and service providers alike. A simple act of buying a new pair of
shoes can turn awry before your very eyes. For example, in one of the largest
hacking cases reported, thieves who accessed shoe retailer Designer Shoe Warehouse's
(DSW) database in 2005 obtained 1.5 million credit card numbers, debit card
numbers, checking account numbers, and driver's license numbers, leading to
a flurry of law suits.
High-profile cases such as this drew a greater focus on cardholder data protection
and network access control, thus leading to the development of PCI-DSS, which
encompasses 12 commandments, or requirements, designed to tighten
data security. These guidelines include everything from installing firewalls
to monitoring all network access to cardholder information. Those companies
that refuse to meet PCI-DSS standards may face some hefty fines and loss of
interchange rates from the participating credit card companies.
In 2006 alone, VISA filed claims totaling $4.6 million against retailers who
failed to comply with the standard, an increase of around 35 percent from the
previous year. The individual fees and fines themselves are hefty, ranging from
$50,000 for each day that a retailer fails to comply with the guidelines, up
to $500,000 for cases of data theft. If the fines are not enough to force compliance,
then three little letters may also serve as motivation -- T-J-X! The TJX data
breach resulted in the loss or theft of more than 45 million credit and debit
card numbers over an 18-month period. Investigators found the company had not
encrypted customer data, a key component of the PCI standards. Retailers do
not want to be the next poster child for failing to protect its customers, and
class action litigation and government regulations can potentially bankrupt
a company that exposes cardholder data to hackers or identity thieves.