This is page 2 of:

Cloud Vendor Hypocrites: Contracts May Not Help

June 20th, 2012

Could the CSA guidelines actually form a contractual obligation? It depends on the specific guidelines, but sure. For example, the Common Controls Matrix (CCM) looks an awful lot like the ISO standards and, in turn, like a bunch of other guidelines (can you spell PCI-DSS?). But would any cloud provider commit to something like, “Ensure that all antivirus programs are capable of detecting, removing and protecting against all known types of malicious or unauthorized software with antivirus signature updates at least every 12 hours.”

Lawyers are used to a degree of both specificity and ambiguity in contracts. So, if I have a program that is “capable” of detecting against malware but is not installed, am I compliant? By “known” malware, does this mean known to the software program, known to antiviral vendor, known to the public or known to the malware creator (in other words, unknown)? This is why lawyers aren’t invited often to cocktail parties.

Multiply this definitional problem by a few hundred for each “standard,” and you see why there is a problem. If a cloud contract requires the cloud provider to maintain “reasonable” security, then the standard is too loose to be enforceable. Make the standard too rigid, and you have instant breach. Force compliance with a standard that is aspirational or changing and, again, either the provider is not compliant or the price of cloud services quintuples. If you are lucky.

So what should a cloud customer do? First and foremost, make security part of your discussions with your cloud provider. And that means having discussions with your cloud provider. Don’t just click on a link, e-sign a contract and, boom, you have cloud. You want to know what the provider is doing for security and how. Use the CSA matrix as a framework.

Ask probing questions and get answers. Use those answers to craft your contract. Many cloud providers simply offer up a sample contract on a take-it or leave-it basis. You can bet those terms are not going to be written in your favor. If security is important to you (and it should be), make sure your cloud provider knows it.

Merchants are familiar with the distinction between marketing and puffery and lies and deceit. If you say customers love your store, that’s puffery. If you say 42 percent of customers prefer our store to the competitor, you’d better have some research to back up that statement or the FTC will be after you.

Just because a cloud provider supports the standards of the CSA doesn’t mean it will live up to them. Ask hard questions, get answers and get everything in writing. And remember, you can never think of every question to ask in advance. That goes for any long-term relationship you may enter into.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.