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Google Burned By Partners To The Tune Of $22.5 Million

July 11th, 2012

Think that keeping customer and payment-card data in-house but using the cloud for other projects will keep you safe when it comes to PCI and privacy? Don’t be so sure. As Best Buy learned when its IT shop first discovered the cloud, the ease of starting a project in the cloud also means it’s easy to avoid IT governance. Unless every developer, every business manager and every executive understands that card data in the cloud is strictly forbidden—no matter what—someone will decide it’s safe enough for analyzing historical data or adding some quick capacity to deal with an E-Commerce site glitch.

Good luck keeping that sort of thing from happening on your cloud. Even better luck keeping it from happening if some clever business-side power user discovers he can extract CRM or POS data and rent cloud time on his own to crank it through a Hadoop application.

But you don’t even need a cloud to get into trouble. Say some programmer has hacked together a workaround to solve a problem for a business unit or a partner—maybe it’s as simple as using a cookie in an unusual way, because that’s the quickest way to solve the problem. A few years later, your privacy policy has changed and now prohibits using that type of cookie. All the conventional cookie code has been disabled. But that unusual cookie code isn’t where it’s supposed to be, so it isn’t found until some consumer privacy advocate stumbles upon it and raises a stink.

The more third parties, developers and users that have access to your systems—or support your E-Commerce site—the more complicated the problem is. It requires plenty of governance and discipline to keep everything inside the PCI- and privacy-safe bounds, even under normal circumstances. And even then, governance only helps going forward. Old patchwork will remain hidden until it surfaces to give you problems.

And then there are times that aren’t normal—like any time your E-Commerce site staggers unexpectedly. Keeping the site up becomes the top priority of the E-Commerce operations team. The rules that don’t go out the window can get very badly bent, especially if the crisis happens during a major sale or on Black Friday (ask Target how that comes down).

That’s panic-mode time, when mistakes are easy to make, code reviews are minimal and IT governance is trumped by whatever works. Ironically, though it’s hard to backtrace everything that’s done to keep a site up in a crisis, at least the post-crisis cleanup teams know they’re looking for potential problems. It’s much harder to find the old, one-off workarounds that are problems waiting to happen.

The “correct” answers—governance, discipline, communication—still only go so far. As Google discovered, you can actively watch out for those messy, unsignaled side effects—but you still have to be prepared to get the bad news.


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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...

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