Your Partner’s Security: A Weakest Link Scenario
Written by Evan SchumanGuest Columnist David Taylor is president of the PCI Alliance and a former E-Commerce and Security analyst with Gartner.
In the past week, I talked to several specialty retail chains all facing the same problem: Their corporate location and all or most of the fully owned stores have achieved PCI compliance, but they have hundreds of other franchisees and independent retailers, which carry their brand.
These stores are not PCI compliant and have little motivation to become compliant. The concern for each of the security and internal audit people I spoke with is that they are aware of fairly serious security problems, but their hands are tied when it comes to fixing these problems. Why? Two words: Liability and Cost.
In case you missed my earlier columns, I’m trying to talk with 100 merchants about their PCI management issues as part of building a PCI Knowledge Base so merchants can anonymously share their experience with their peers. It turns out that one of the biggest questions to come out of these conversations is how to help affiliates, resellers, franchisees, and independently owned stores reduce their risks and become compliant, without providing explicit direction that, if wrong, could cause the corporate office to be liable for the mistakes of an independently owned and managed store, or group of stores.
This is often interpreted as equating specific advice to the assumption of liability, and the same goes for giving explicit advice, or making specific security product recommendations to affiliated stores. The result is a "hands off" approach to securing these stores, leaving independent store management with little security guidance and even less motivation, as most of them are Level 3 and 4 merchants who are under little pressure from the card brands and the banks to achieve compliance.
In addition to a high percentage of independent or franchised stores, the vast majority of the POS systems are integrated with gas dispensers, and because the cost of upgrading these integrated POS/dispensing systems is so high (and the profitability of selling gas is so low – despite what most think), the vast majority of these integrated POS systems are still not compliant.
Based on the ROI these merchants are facing, PCI compliance will take several more years, or it may be more profitable to just "dig up the tanks" as one manager put it, and stop selling gas at some of these stores all together. In this case, even though the independent stores represent a major security and compliance risk, the upgrade cost is too high for corporate to absorb.
Bottom line: rather than just raise these issues, I’m ready to offer at least a partial solution, in that there’s a way to provide very explicit advice without incurring any liability. If corporate security managers provide guidance to their affiliated stores that is based on an independent source of best practices, such as the PCI Knowledge Base. It’s a reasonable way to select those bits of experience and advice you wish to pass on, while not taking direct responsibility for what is essentially advice from a group of their peers. It may not be much, but it’s a start.
Guest Columnist David Taylor can be reached at David.Taylor@PCIAlliance.org.
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.
-Marc
