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Major Chain Loses PCI Compliance When Data Center Moves

July 16th, 2013

A conference call was quickly scheduled with the merchant’s acquiring bank and key card brands to discuss the PCI compliance reporting options. And, yes, there were some serious differences of opinion between the retailer and the QSA. Those options were: (1) mark the network flat and not segmented and reference the new data center project as the reason for the situation and non-compliance or, (2) develop a compensating control for the flat network. The reason that the current network configuration results in non-compliance is that not all of the devices on the network are properly configured and controlled to ensure PCI compliance because these devices have been out of scope in past PCI assessments.

If marked non-compliant, this will require that the acquiring bank monitor the data center project through completion and then ensure that the ACLs are placed back in operation to properly segment the network. Although this is the QSA’s preferred option, the chain does not want to be flagged as non-compliant, so they are pushing for a compensating control.

During the acquiring bank conference call, the reporting options are discussed. Although the QSA and internal audit push for the non-compliant Report On Compliance option, the merchant’s management pushes for a compensating control. The QSA discusses the fact that the controls the merchant intends to rely upon do not appear to meet the “above and beyond” requirement.

At the end of the call, the acquiring bank decides they also do not want to deal with a non-compliant ROC, and they tell the QSA to prepare a compensating control that they will evaluate prior to submission of the ROC. A few weeks later, the QSA submits the compensating control for the acquiring bank’s review. Except for a few wording changes, the compensating control is accepted and the merchant’s ROC is completed.

What are the lessons that can be learned from this incident?

  • Acquiring banks have an incentive to ensure that merchants provide them with a compliant ROC.
  • If a retailer can construct a reasonable business case for a compensating control, that will win out over a non-compliant ROC almost every time.
  • PCI compliance is all in the eyes of the beholder, particularly when it comes to the merchant and its acquiring bank and their business relationship. In this case, even though the QSA might have had a strong argument for non-compliance, the relationship between the merchant and acquiring bank trumped that strength.

    Jeff can be reached at pciguru@gmail.com.


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    8 Comments | Read Major Chain Loses PCI Compliance When Data Center Moves

    1. Crypteron Says:

      Many companies are loosing PCI compliance when they move to the cloud. Not because of data center standards but because of not properly securing their sensitive customer data.

    2. Preston Says:

      “Real world” PCI news is precisely why I keep coming here and I love case studies like this. Please keep ‘em coming!

    3. Earl Jaforski Says:

      So….. who is this major chain retailer?

    4. Joe Says:

      A simple data center transition? Ha!

    5. Michael Says:

      I’d like to know… who is the acquiring bank.

    6. Nathan Says:

      “PCI compliance is all in the eyes of the beholder”

      Well then maybe the beholder had better take off his rose-colored glasses, huh?

    7. Matt Getzelman Says:

      This real-world example demonstrates the complexities of maintaining PCI compliance and the importance of the QSA’s relationship with the merchant. Another lesson learned here is that retailers should work with their QSA throughout the year and develop a trusting relationship, as opposed to communicating only during assessment activities.

    8. PCI Eagle Says:

      I’d like to know what the compensating control was/is so that I can apply that to my flat network to “win out over a non-compliant ROC”.

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