Tag Archives: data breach

Global Data Breach Update

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Today The Official Merchant Services Blog is updating its coverage of the Global Payments Data Breach. The current update revolves around the expansion the duration of the breach as well as the number of cards potentially affected. It has been a virtual roller coaster ride in terms of narrowing down a number for the cards that were compromised. When the news of this breach initially hit on Friday, March 30 there were reports that a mere 50,000 cards were compromised. Then at the height of the story’s initial frenzy it was reported that the number of compromised cards might be closer to 10 million. Attempting to quash that frenzy, payments processor Global Payments Inc. itself released a statement that the number was closer to 1.5 million cards. And now, after some relentless coverage and work by Brian Krebs — the blogger who first reported the breach — it appears the number is once again creeping back towards the 10 million mark.

“That’s No Moon” 

The size of the Breach keeps expanding after Global Payments initially made statements that downplayed both its size and its impact.

Global’s statements have all been very succinct, and the company says it reported the breach immediately when it found out about the breach. Global also stated that the breach is contained and only affected 1.5 million cards or less when it occurred in February 2012.

But Visa and MasterCard issued new alerts on May 15 and suggest the breach dates back to January 2011 — an exposure window significantly longer than what was originally reported when news of the breach surfaced in late March. Visa’s alerts in March, which Brian Krebs used to break the story,  indicated the breach occurred sometime between Jan. 21, 2012, and Feb. 25, 2012. Global used those alerts to help underscore their assertion that the breach was small and contained. But on April 26, an updated advisory from Visa put the suspected intrusion date closer to June 7, 2011. Setting the length of exposure for compromised cards back six months. And then Visa and MasterCard released information that pushed the date back an entire year from the initial alert, to January 30, 2011. This vaults the figure of compromised cards to 7 million — much higher than the 1.5 million “or less” suggested by Global in their official statement.

All this wiggling over the timeline and severity of the breach has been met with silence from Global Payments. They have offered no further comment other than to link to their website.

So About Those Compromised Cards …

And apparently the Breach may not have been contained, or at least not contained quickly enough to prevent fraud. Krebs says on his blog, krebsonsecurity.com, “Debit card accounts stolen in a recent hacker break-in at card processor Global Payments have been showing up in fraud incidents at retailers in Las Vegas and elsewhere, according to officials from one bank impacted by the fraud.”

This is a pretty big break in the ongoing story, as details of fraud have been danced around previously and Global’s not released any statements other than their initial commentary that suggested the breach was not going to produce any meaningful fraud. Krebs says that in March of this year the Danbury, Conn. based Union Savings Bank began seeing an unusual pattern of fraud on a dozen or so debit cards it had issued, noting that most of the cards had recently been used in the same cafe at a nearby private school. The bank noted that the school was a customer of Global Payments and so the bank contacted Visa to see if this was related to the breach.

According to Krebs, that’s when USB heard from Tony Higgins, then a fraud investigator at Vons, a grocery chain in Southern California and Nevada owned by Safeway Inc. Higgins contacted Doug Fuller, Union Savings Bank’s chief risk officer. And Krebs’s blog describes the way the fraud worked: “According to Fuller, Higgins said the fraudsters were coming to the stores to buy low-denomination Safeway branded prepaid cards, and then encoding debit card accounts issued by USB onto the magnetic stripe on the backs of the prepaid cards. The thieves then used those cards to purchase additional prepaid cards with much higher values, which were then used to buy electronics and other high-priced goods from other retailers.”

Krebs then goes on to report that the fraud described by Higgins matched the unauthorized activity seen stemming from accounts used at the private school cafeteria. Fuller said Visa alerted Union Savings Bank that about 1,000 of its debit accounts were compromised in the Global Payments breach — including the dozen or so card accounts that initially prompted USB to investigate. Krebs reports that USB officials say the bank has suffered approximately $75,000 in fraudulent charges, and that it has so far spent close to $10,000 reissuing customer cards.

Track 1 Not Needed

The details revealed by Krebs on the fraud perpetrated upon Union Savings Bank illustrates how the criminals can extract value from debit cards even if they only have some of the data associated with the accounts. This is important to understand because Global’s statements have stated that only Track 2 data was taken during the breach. Global maintained that cardholder names, addresses and other Track 1 data was not obtained by criminals in the breach. The indirect suggestion Global was making with that statement was that counterfeit cards could not be produced with the data obtained in their breach. However, the details of what happened to USB shows how Track 2 data alone was enough for the criminals to encode the card number and expiration date onto any cards equipped with a magnetic stripe. Those cards were then capable of being used at any merchant accepting signature debit — transactions that do not require the cardholder to enter a PIN number.

HMS Solutions

Looking at the threat of a data breach, Merchants must wonder what the solution can be. Is there protection available? PCI Compliance is a great foundation for transaction security. The standards and protocols set up by the PCI-DSS Council are the first step a merchant needs to take to protect their data. And Host Merchant Services offers a PCI Compliance Initiative that helps its merchants quickly and seamlessly take that step.

Also, one thing to consider if you are a merchant and you are worried about data breaches affecting your bottom line: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.

 

Internet Security

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Security is one of the defining internet issues of this decade.  While there is not one distinct body of law that governs a company’s rights and responsibilities, there are methods to prioritize compliance efforts.  This issue is relatively unique to the internet space since the laws and regulations that apply come from many different areas.  In recent years the Federal Trade Commission (FTC) has taken an increasingly prominent role in responding to these problems.  In addition, almost every state has some sort of law that at least requires reporting of unauthorized disclosure of information.  Indeed many state laws, particularly Massachusetts and California, go substantially beyond simple breach disclosure and mitigation.

Host Merchant Services is located in Delaware. The Delaware Security Breach Notification Law can be reviewed in its entirety at This Link.

While many agencies, such as the SEC, have regulations that address security issues in the industries they regulate, the FTC is the agency primarily tasked with addressing internet security issues.  The FTC has the authority to prosecute companies and individuals who engage in deceptive trade practices.  The best way to determine the enforcement priorities of the FTC is to look at recent enforcement actions.  These actions have focused on the “locked door” problem:  Many companies focus on the number of locks they’ve placed on the door to data, as opposed to making sure these doors do not become unlocked over time.

Sloppy security practices are an issue that the FTC has said is simply screaming for regulatory and enforcement activity.

Time and time again, the FTC has stated that companies must have procedures in place to ensure that their businesses are secure, to detect security vulnerabilities, and inform customers and, if necessary,  regulators, when unauthorized disclosures are discovered.  To avoid FTC action, internet businesses need to shift some of their security thinking and strategy from high profile areas to basic security and process control schemes.  This could involve redeploying resources from traditional security screening measures (such as trying to breach firewalls) to creating change control processes, training staff on quality control and ensuring that vendors actually meet the security standards you need — and that they profess to have.

It is a bit trickier to generalize about state security statutes.  That said, most state laws have relatively similar goals to their federal counterparts.  As an initial matter you should ensure that your entire “ecosystem” has the same, or similar, breach definitions.  Doing so avoids gaps that lead to misinformation and failure to comply with breach definitions set out in your state laws.  A second component of general compliance is to create both internal and external notification plans.  Your internal plan should create a system where both employees and vendors are alerted to a possible breach.  External plans should contain at a minimum a statement of what is known about the breach, mitigation efforts, a contact point, and future steps you are taking regarding the breach.  You should identify which information will be excluded from these notification efforts because of confidentiality or other restrictions.

A final component of a state compliance plan is to anticipate how you will fold in state regulators and law enforcement entities.  At a minimum, these will be agencies in the state in which you are located, but may, in some instances, include regulatory agencies in other states.  It is important not to play hide-the-ball and simply fail to provide the regulatory and law enforcement notifications required by law.  In making these notifications, you should involve your attorney to determine how much information you are required to disclose, and methods of protecting your company from litigation.

For More Information

For more legal information you can visit my site:

David Snead’s Home Page

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To learn more about PCI Compliance, Host Merchant Services offers these resources:

PCI Compliance FAQ

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PCI Compliance Guide

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Disclaimer:  Legal decisions must be made based on your unique situation. Please consult with an attorney prior to making decisions based on this post.

Data Breach Solutions

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Today The Official Merchant Services Blog has a quick follow up to its ongoing coverage of the Global Payments Data Breach. The past two entries in our blog have taken a sweeping look at the big picture of data breaches and PCI DSS and how effective those security standards are. PCI Compliance is a topic very near and dear to Host Merchant Services because the company pushes an aggressive initiative among its customers to keep them PCI Compliant.

PCI Compliance: The Foundation of Security

Past studies from Verizon and Gartner Research have suggested that business owners slack on their security needs, especially in terms of PCI DSS compliance. The most oft suggested reason for this lax outlook on security has to do with PCI itself not having a lot of traction with those business owners. The merchants tend to think any security issues are the responsibility of the third party processor or the bank or the credit card companies; they don’t see a direct link to their business because of the simple fact that their terminal that swipes cards wasn’t theirs to begin with. Other issues include Merchants getting lost in the complexities of the PCI DSS website and its many forms that need to be filled out, and the recent change to PCI version 2.0 in October 2010 changing the structure of the system. Merchants get distracted by their day to day responsibilities of the business and gloss over the minutiae of PCI compliance.

Host Merchant Services understands these problems. Part of their service mantra is that the company designs payment processing solutions that let their merchants focus on running their company. The general theme is to make payment processing seamless and easy for the merchants. This includes transaction security and was the catalyst that fueled the company’s PCI Compliance Initiative.

But as we’ve seen with the Global Payments Data Breach, security needs to go beyond just PCI Compliance.

An Extra Layer of Protection

This Article from The Data Center Journal suggests that better admin priveleges could have helped stave off The Global Payments Data Breach completely. From the article: “Avecto says that the possibility that the breach was caused by a compromised administrative account that was insufficiently protected shows that governance is a central requirement of modern IT security.”

The article maintains that multiple layers of security can go a long away to helping to prevent future data breaches of this type. Paul Kenyon, chief operating officer with Avecto, said in the article that “Our observations on this breach suggest that minimizing administrative privileges—an exercise in the principle of least privilege—would have gone a long way to preventing the breach.” It was suggested to Kenyon from another IT Security analyst that the privileged accounts that are reportedly at the heart of this breach need several layers of protection to properly insulate them from hackers.

Most articles looking at the aftermath of the data breach arrive at the consensus that security measures need to go beyond just PCI compliance. This article gives some very specific and clear advice on a step to take — a data breach solution.

Data Breach Penalties Stack Up

Yesterday’s blog also delved into the cost and fees companies face when they suffer a data breach.

And this article by Bank Info Security gives even more insight into the cost and impact of a data breach. It interviews Larry Ponemon, founder of the Ponemon Institute, which conducted this year’s Cost of a Data Breach study with sponsorship from Symantec. The study revealed that the average cost of a Data Breach has gone down this year. Which makes sense when you consider that even with the Global Payments Data Breach in the news right now, the scale is a lot smaller than the scale of the Heartland Data Breach.

In fact, this article, also from Bank Info Security, gives a side by side comparison between the much bigger Heartland Data Breach and the Global Payments Data Breach.

But back to Ponemon’s interview and his company’s study: “According to the annual report, the average per capita cost of a data breach has declined from $214 per record to $194 since 2011’s report.”

Ponemon suggests two reasons for the decline in average costs.

  1. Complacency: “We think people in general may be becoming numb to the data breach notification process. Most people have received at least one data breach notice; they may not even be aware of it because they don’t open their mail. The may see it as junk mail.”
  2. Topical Shift, or rather the rise of intellectual property breaches, which are not a part of the annual study: “We focus on one type of data breach – the type of data breach [of personal records] that requires notification in the United States and then other parts of the world – but in reality there are other, maybe more costly, data breaches that companies are experiencing every day.”

 

HMS Data Breach Security Program

The hackers that go after credit card information are a creative group of criminals who are constantly pushing technology forward and tying security systems in knots. Many times a discussion about data breaches ends up with the conclusion that “it’s not if a data breach is going to happen, it’s when a data breach is going to happen.”

Host Merchant Services offers a key resource in preparing a business to tackle that issue: Its Data Breach Security Program. This program protects a business and a merchant can get up to $100,000 in coverage per location for the most common forms of data breach:

  • Employee Dishonesty
  • Skimming
  • Theft of Credit Card Receipts
  • Theft of POS Terminals
  • Stolen Card Numbers
  • Theft of Computers

 

The Data Breach Security Program helps cover fees for any industry-mandated audit of a suspected breach, card replacement costs and related expenses, and industry fines and assessments. All of these fees come from non-compliance with PCI DSS and are fees and issues that any company even suspected of a breach can face as we described yesterday in our blog. The coverage would exceed even the penalties that Cisero’s faces as we saw in the article about their lawsuit targeting the PCI itself.

How Does It Work?

Host Merchant Services makes it easy to file claims once you’ve gotten on board with the Data Breach Security Program. A simple online form starts the process:

  • Step 1: Fill out the online claim form at www.merchantdatabreach.com
  • Step 2: Upload or fax the notice from the acquiring bank, which stipulates that there has been a breach or a suspected breach at your location and choose an authorized, qualified security assesor.
  • Step 3: When the forensic audit is complete, upload or fax a copy of the assessor’s report.
  • Step 4: HMS takes it from there. We process the claim for payment and if all documentation is in order you will receive a check for the expenses incurred from the audit and/or card replacement costs and/or fines incurred for a breach.

To recap

Data Breaches can and will occur. They are costly. The recent Global Payments Data Breach reminds us all how important transaction security is for all parties involved. Merchants need to understand how important PCI Compliance is for their business. And they also need to take more steps than just PCI Compliance. Host Merchant Services is committed to keeping its merchants safe and secure. The company takes the lead in the industry in terms of PCI Standards with its PCI Compliance Initiative. And the company offers added layers of protection to its merchants through its Data Breach Security Program.

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PCI and the Data Breach [2023 Update]

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TodayThe Official Merchant Services Blog continues looking at the bigger picture of the impact from the Global Payments Data Breach — specifically looking at the affect it’s going to have on PCI DSS as well as a little foray into State Security Breach Notification Laws.

You’ll remember yesterday we highlighted some of the criticisms found in the PCI DSS, specifically this article by Taylor Armerding which suggested that PCI compliance is not enough to protect data from the skilled and focused hackers who cause these data breaches.

We then focused on how PCI Compliance is still a great foundation for your transaction security. The standards and protocols set up by the council are the first step a merchant needs to take to protect their data. And Host Merchant Services offers a PCI Compliance Initiative that helps its merchants quickly and seamlessly take that step.

Still the idea that PCI DSS is not living up to its billing as security shows itself in this story from Wired about a small business filing suit against against its bank claiming that the financial institution, which used to process the restaurant’s credit and debit card transactions, wrongfully seized money from the business’ merchant bank account. In short, the business is suing the bank for taking funds as penalties for being non-compliant with PCI DSS.

Taking it to Court

The story explains that Stephen and Theodoara “Cissy” McComb, owners of Cisero’s Ristorante and Nightclub in Park City, Utah, racked up $90,000 in fines that Visa and MasterCard imposed after alleging that Cisero’s had failed to secure its network and suffered a data breach that resulted in fraudulent charges on customer bank cards. U.S. Bank seized about $10,000 from the McComb’s merchant account to cover those penalties and then sued the McCombs to obtain the remaining balance on the fines, saying a contract the McCombs signed with the bank makes them liable for such fines.

The McCombs struck back with a bold countersuit. The story explains: “But in their countersuit against U.S. Bank, the McCombs allege that the bank, and the payment card industry (PCI) in general, force merchants to sign one-sided contracts that are based on information that arbitrarily changes without notice, and that they impose random fines on merchants without providing proof of a breach or of fraudulent losses and without allowing merchants a meaningful opportunity to dispute claims before money is seized.”

This suit challenges the basic foundation of PCI security standards and opens up a lot of old wounds and criticisms about PCI DSS in context of the card issuers that make the call and form the council for PCI DSS. As the story says: “The controversial system, imposed on merchants by credit card companies like Visa and MasterCard, has been called a “near scam” by a spokesman for the National Retail Federation and others who say it’s designed less to secure card data than to profit credit card companies while giving them executive powers of punishment through a mandated compliance system that has no oversight.”

The linked article provides much of the details that led to the data breach with Cisero’s, as well as why the fines and penalties were applied according to PCI DSS standards. The McComb countersuit relies heavily on their assertion that PCI DSS oversteps its bounds in applying those penalties, offers no recourse for people to dispute the penalites, and levies penalties against businesses for violations even when no fraudulent transactions occur.

The Cost of a Data Breach

This case above and much of the criticism targeting PCI DSS deals with the fines banks, processors and subsequently merchants face when data gets breached. This article looks into the cost merchants face when the worst case scenario occurs. A lot of merchants feel that lack of compliance isn’t an issue because they feel they are not responsible of something goes awry. But this article sheds some light on that: “suppose you or your merchant is suspected of one of those inevitable human errors, or of being a victim of a hacker. As long as there isn’t actually a breach, it’s no big deal, right? Wrong.”

The article lists the costs of penalties:

  • Forensics Audit done by investigators when they suspect your business is susceptible to a breach: Between $8,000 and $20,000
  • $3 to $10 per card to replace all cards compromised in a breach that happens.
  • $5,000 to $50,000 in fines for lack of compliance.
  • And even further in fines specifically tied to any fraudulent transactions that do occur as a result of the breach.

The article states that the average cost comes to $36,000, a hefty sum that can cripple small businesses. The McComb data breach may seem high in comparison, but going over the huge variance in the fine structure, it’s pretty easy to see how the bank came to a $90,000 figure.

Back to Global Payments

Speaking of the fees and penalties, it’s interesting to note that the company faces many of the same problems that small businesses do now that Global has been breached and run afoul of Visa in terms of PCI Security and  Compliance. However this story for ZDNet states that the company will likely absorb any costs from the data breach and not be affected as badly as some of the small businesses discussed above are affected by fees and penalties.

Global Payments continues to process, even after being dropped by Visa’s list of providers that meet security standards. The company is now working on being reinstated and once again being PCI Compliant. Working in their favor is their statements that they reported the breach to authorities the moment they found out it happened.

Which brings us to …

Security Breach Notification Laws

Security Breach notification laws were enacted in response to an escalating number of breaches of consumer databases containing personal information. The first such law was the California data security breach notification law, or SB 1386. It was enacted in 2002 and became effective on July 1, 2003. Currently 46 states, the District of Columbia, Puerto Rico and the Virgin Islands have enacted similar legislation requiring the notification of security breaches involving personal information. The only states that currently have no such law on their books are Alabama, Kentucky, New Mexico and South Dakota.

  • Host Merchant Services is located in Delaware. The Delaware Security Breach Notification Law can be reviewed in its entirety at This Link.
  • Global Payment Systems is located in Georgia. The Georgia Security Breach Notification Law can be reviewed in its entirety at This Link and its subsequent amendment can be found at This Link.

These laws tend to follow a similar basic structure to the one California passed first in 2002 — companies need to immediately disclose a data breach to customers, usually in writing.  There have since been a number of bills that would establish a national standard for data security breach notification but none have been passed in Congress yet.

The Bottom Line

So what does this all mean? For now it appears that Global is weathering the storm brought on by the news of the data breach. They’ve minimized the impact of the bad news and are working to get their compliance situation straightened out. The data breach has put the spotlight onto the PCI DSS itself and we’ve seen that some small businesses and merchants are highly critical of the system. Comparing the crippling fines they can theoretically face for a breach that leads to no fraud against the impact that a large processor like Global faces for the same type of problem can leave some thinking the system needs more oversight. But PCI DSS does set the bar for security. It forces hackers to work harder than they would if it didn’t exist. It is a first step in terms of what merchants and processors need to do to protect transaction and data security.

The court case in Utah is very fascinating as it really takes the contract aspect of the PCI DSS to task. The Official Merchant Services Blog will continue to follow the news on that case. And we will keep you posted on the latest developments with this Global Payments Data Breach.

Data Breach Consequences [2023 Update]

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Today The Official Merchant Services Blog is going to delve into the bigger picture of the impact that the Global Payments Data Breach is going to have on the payment processing industry. Obviously this news is going to have a huge impact on Global Payments itself. The company faces a big penalty after Visa dropped it from its registry of compliant service providers due to “unauthorized access into a portion of (Global Payments’) processing system.”

Fees and penalties related to reacquiring its compliance status and getting back on the registry will add up. In fact an executive from Co3 Systems, a data loss management firm, estimated the potential liability for a merchant with 1 million cards compromised could top $1.6 million from compliance fines alone. With Global’s own official statements indicating that the number of cards that were compromised being less than 1.5 million, the Co3 estimate is probably right in the ballpark of what Global faces.

The company also will take a hit to its business simply because of the breach itself and being dropped by Visa. While they are off the list, some potential customers may not be able to sign with them due to the lack of compliance status. And if the process to be reinstated takes too long, it could affect some of their current customers.

But there’s a larger context that needs to be considered with this data breach: PCI DSS itslef.

We’ve covered PCI Compliance very extensively in the blog. We looked at a report from Verizon last year that suggested 79% of organizations Verizon surveyed were found to be non-compliant in their initial audit in 2010. The study from the previous year had 78% of organizations were non-compliant. A study by Gartner Research demonstrated that 18% of merchants they surveyed were not PCI Compliant at all.

What is PCI?

These studies just underscore the large problem payment processing faces with security. The acronym PCI DSS stands for Payment Card Industry Data Security Standards. PCI Compliance is essentially the process of adhering to the standards set forth by the Payment Card Industry Data Security Standards Council (PCI DSS). You can review those standards in greater detail here. Essentially the standards are a set of requirements designed to ensure that all companies that process, store or transmit credit card information maintain a secure environment.

What’s the Problem?

One of the biggest criticisms of the PCI DSS is that it is the minimum agreed upon set of security protocols. Because of its nature as a consensus set of standards put together by the council, PCI is often criticized for being behind the curve or not being thorough enough to deal with the hackers who are trying to get at the data and breach the security of the transactions. Combine that with the studies that keep showing merchants are not keeping their compliance current or not even becoming compliant in the first place and you open the door for a lot of criticism against the system designed to keep transactions safe and secure.

Taylor Armerding wrote a compelling article for CSO Online on the issue of PCI compliance in the aftermath of the latest data breach.  The lead statement of the article underscores the issue simply and effectively: “The latest data security breach to strike MasterCard and VISA has security experts focusing anew on the good and bad of PCI DSS. On one hand, the standard offers a clear blueprint on how to handle such a breach. On the other hand, compliance is usually not the cure, as this latest incident demonstrates.”

To add emphasis, Armerding quotes Neil Roiter, research director at Corero Network Security, as saying: “The Payment Card Industry Data Security Standard (PCI DSS) is highly prescriptive in nature, but simply complying does not ensure credit card security. Companies that rely on PCI DSS to solely dictate their security measures will continue to remain vulnerable to attack.”

The Weak Link

Armerding’s article suggested that compliance isn’t the be-all-end-all for security and that humans were still weakest link in the system. Quoting Anup Ghosh, founder and CEO of Invincea, a developer of browser protection systems, the article says that too much of the security standards are stuck in the past. Ghosh also suggests that PCI is complacent and easy for hackers to circumvent. Ghosh says that the systems in place are more designed to tell you what happened after the fact, being a reactive solution rather than a proactive solution. Ghosh then suggests that the data that was compromised was likely encrypted, but the security standards are behind the curve where it really counts: The Human Layer of Security.

Ghosh explains: “If I target employees, which is how you target these days, it is not very hard in phishing campaigns, to get employees to open an email or click on a link, which then provides access to their desktop and the privileges that come with it. [And in that case] Encryption is worthless.”

He then suggests a more proactive step of creating a more secure virtual environment for employees to work in so that whatever an employee clicks doesn’t end up compromising any data in the system.

PCI is Still Very Important

What Armerding and Ghosh say about PCI is quite compelling. But they both still point out that PCI Compliance is very important for merchants and payment processors. The standards may be behind the curve with the ever-clever hackers going after credit card data, but they set a starting point for security. They set the bar high enough that hackers have to put in work to circumvent the systems. Having PCI is so much better than not having it — which demonstrates how scary the Verizon and Gartner studies are.

Host Merchant Services advocates and performs a very zealous crusade for PCI Compliance. The company takes data security and safe transactions seriously and makes PCI Compliance a part of its value-added service package. HMS began a PCI Compliance Initiative last year that started with an ad campaign that offered for a limited time free PCI Compliance fees for merchants who signed up during that time. It then extended into an initiative run through a partnership agreement with HostMySite.com that offered a free PCI and Security Analysis to any customer interested, and now that same offer is available to anyone interested in Host Merchant Services, partnership or no partnership. The company provides on-call assistance with PCI Compliance questions and problems and will help all of its merchants get through the process with tips and advice from Host Merchant Services’ own PCI Compliance experts.

Tomorrow The Official Merchant Services Blog will follow up with the latest developments from the data breach, as well as more information about PCI Compliance, and PCI DSS issues that the payments industry and the tech industry are discussing.

For More Information

For more information about PCI Compliance, Host Merchant Services offers these resources:

PCI Compliance FAQ

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PCI Compliance Guide

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More on the Data Breach [2023 Update]

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Following up on our continuing and extensive coverage of the Global Payments Data Breach, The Official Merchant Services Blog has some new tidbits to report from the man who initially broke the story — Brian Krebs.

Krebs felt he needed to respond to the Global Payments conference call delivered by company chairman and top executive Paul Garcia.

In that call Garcia said, “There’s a lot of rumor and innuendo out there which is not helpful to anyone, and most of it incredibly inaccurate. In terms of other timelines, I just cannot be specific further about that.”

Krebs took that ambiguous commentary as a specific reference to his own reporting of the incident — notably that Krebs’ reports offered a different timeline than the one Global had been offering, Krebs’ reports offered a culprit in the data breach (citing Dominican Street Gangs and a New York City cab company and garage), and Krebs’ reporting suggested that at least 876 fraudulent cards had already been discovered as having been in use as a result of the breach while Global stated no fraudulent transactions were linked to the breach.

So there were definitely some differences in what was being reported by Krebs and being discussed, however grudgingly and tight-lipped, by Global in its official statements. It had gotten to a point of such discrepancy that Krebs was entertaining the idea that the Global breach wasn’t the breach he had initially reported. Krebs believed there might be another breach, still unverified, that fit his reporting better. As Krebs wrote on his blog: “Indeed, given GPN’s statements thus far, I continue to be nagged by the possibility that my initial reporting may have been related to a separate, as-yet undisclosed breached at another processor.”

But until another breach actually surfaces, Krebs continues to treat the Global breach as the one he had heard about and reported.

The Number Skew

The first topic Krebs addressed in response to Global’s statements and commentary was the number of compromised cards that Global reported versus the number of compromised cards the Wall Street Journal initially suggested. Krebs notes that the language Global is using in reference to the numbers is distinct and different from the language other companies have used in the past in terms of previous data breaches.

From an abcnews.go.com article: “Brian Krebs, the security expert who reported about Visa and MasterCard’s

security breach on Friday, said GPS is only stating how many accounts it believes were ‘exported,’ which focuses on the number of accounts or card numbers that a forensics expert could reasonably argue were offloaded or downloaded from the company’s systems. “What GPS has not said is how many transactions they processed — and potentially compromised — during the time between when they discovered the breach,” Krebs said, which was early March, according to Global Payments, “and when they ‘contained’ the breach [in late March].” Krebs said the number of transactions or card numbers potentially exposed while the company was actively compromised ‘is probably far larger than the 1.5 million number they are citing in their statements, because those statements appear to be based on a figure that the company can say with relative certainty were downloaded or copied from its systems.’ “

Change in Web Hosting

The next tidbit Krebs offered was that Global changed its web hosting company in February: “For the past two years, GlobalPaymentsInc.com has been hosted at MaximumASP, a hosting provider in Louisville, KY. On Feb. 20, 2012, the company moved its Web site toAmazon’s EC2 cloud hosting service. MaximumASP declined to answer questions about possible reasons for the switch, citing customer confidentiality policies.”

This change in hosting appears to take place in the timeline that Krebs has offered as when the breach happened, and just a short time prior to the time when Garcia says the company discovered they had been breached.

Data Breach Chart From Visa

The next tidbit Krebs offered was a chart detailing the anatomy of a data breach. Krebs felt it was significant to note that there is a time period that Visa calls the “window of vulnerable transactions.”  And Krebs also notes that the chart shows that discovery of the breach may or may not happen after the start date of the breach. All of this is an attempt to further investigate the timeline that Krebs is trying to construct even in the face of Global’s vague commentary about said timeline.

Hacker Makes Bold Claims

The last tidbit Krebs pointed out was that there are reports that the breach was far more extensive than was being reported.

Krebs cites a New York Times article: “The New York Times in a story published Saturday cited unnamed sources saying that this was the second time in a year that Global Payments had experienced a breach.”

Krebs then backs that claim up with a source of his own: “I have heard likewise from an anonymous hacker who claims the company was breached just after the new year in 2011.  The hacker said the company’s network was under full criminal control from that time until March 26, 2012.”

Krebs’ hacker source also claimed that hackers had been capturing data at regular monthly intervals from the company’s network for 13 months. They were gathering data on a total of 24 million unique transactions before they were shut out.

And Krebs tried to verify the authenticity of his source: “When asked if he had evidence that would back up his claims, the hacker produced a Microsoft Word document with Global Payments’s logo entitled “Disaster Recovery Plan TDS US: Loss of the Atlanta Data Center.” The document appears to have been created on May 6, 2010 by Raj Thiruvengadam, who according to LinkedIn.com was an Atlana-based Oracle database administrator for Global Payments from May 2006 through August 2011.”

What it all Means

Well at its most basic, there is a discrepancy between the information Global is releasing and the information that Krebs is uncovering. There very well may be a separate breach that Krebs was given the information on. As Krebs noted himself, in his initial report he did not mention Global at all. There also may be a separate or longer breach that happened to Global. Or it might be as Krebs suggested to ABC News, a purposely chosen metric for the numbers that doesn’t take into account something like “window of vulnerable transactions.”

Krebs and Global will most likely be advancing this story throughout the week and The Official Merchant Services Blog will keep you up to date on those details.

Global Payments Data Breach  [2023 Update]

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The Official Merchant Services Blog tackles the big news in the payment processing industry today: The Global Payments Data breach.

The news of this data breach hit on Friday and the weekend has seen some wild speculation tossed about. At first there were reports that a mere 50,000 cards were compromised. Then the media upped the number to 10,000,000. Today Global Payments and the media sources covering the story are reporting that the number is closer to 1.5 million cards.

The Story So Far …

The breach was first reported by blogger Brian Krebs at KrebsonSecurity.com. He said on Friday that Visa and MasterCard were alerting banks across the country about a recent major breach at a U.S.-based credit card processor. The first report cited as many as 10 million cards were compromised. By that afternoon Krebs revealed that the processor was Global Payments, and that the breach was discovered in early March 2012. Krebs cited the breach as occurring between January 21, 2012 and February 25, 2012. The alerts issued by Visa and MasterCard, according to Krebs, stated that Track 1 and Track 2 data was taken — which Krebs said meant that the information could be used to counterfeit new cards.

Then the media got more involved.

The Wall Street Journal followed up Krebs blogging with a story about the breach, making the news official. Global remained silent throughout the day, only confirming the report after the close of the markets and trading.

The rabid interest in the data breach sparked an interesting article by USAToday, which expanded on Krebs’ own reporting. Krebs stated that he had heard from his sources that investigators suspect Dominican street gangs were involved in the fraud, focusing mainly on commercial credit and debit card accounts. The article then cited Garnter banking security analyst Avivah Litan, who claimed that the breach involved a taxi and parking garage company in the New York City area. It was suggested that consumers who had paid for a NYC cab in the previous months using the new swipe technology might be victims of the breach and possible fraud. Litan also said she too had heard about a Central American gang connection.

Global’s Statements

Finally Global Payments started talking. The breach was verified by Global. Paul Garcia, Global’s chairman and chief executive, said in a statement that the breach was reported by the company to the FBI — suggesting that the company promptly identified the breach and reported it to the authorities. They’ve now called it a “self-reported” breach. However, media sources do note that the news about the breach still had to be dragged out into the spotlight by Krebs and his blog.

After confirming the breach Garcia stated that the breach was “absolutely contained” and stated that there had been no “fraudulent transactions” related to the breach.

However, the Green Sheet reported on Friday that Krebs had reported that PSCU Financial, a nonprofit cooperative credit union service organization, told its members 56,455 Visa and MasterCard accounts had been compromised, but fraud was found to have occurred in only 876 accounts so far.

Garcia stated that 1.5 million card numbers were compromised by the breach and re-affirmed that no fraud had taken place related to the compromised cards. “This is manageable,” Garcia said.

Visa Takes Action

In response to the data breach information hitting the spotlight, Visa took action against Global Payments. Visa removed Global Payments, an Atlanta company that helps the payment giant process transactions for merchants, from its list of “compliant service providers.”

Garcia in his statements to the press acknowledged that Visa had removed Global Payments from its compliance list pending resolution and remediation of the breach and that it was working “as expeditiously as possible” to return to compliance. The process would take “not days, but we don’t think it’s months.” In other words, Global was not going to be able to fix their PCI status quickly. Global Payments continues to process Visa cards worldwide according to Garcia.

Both Visa and MasterCard say their own systems weren’t compromised. Both credit card issuers had said Friday that they notified their card holders of the potential for identity theft and illicit charges because of the breach.

The Consequences

Global has not yet identified the size of the charge it will take as a result of the breach. But it is interesting to note that Heartland Payment Systems racked up a cost of $12 million in penalties and legal fees when its data breach compromised more than 120 million credit cards.

The Official Merchant Services Blog will be devoting much of its coverage to this developing story. Tomorrow we’re going to take a look at any updates as well as how this issue fits into the ongoing news regarding PCI security and compliance. Data Breaches have been a topic this blog has covered before. Though we’ve focused more on the breaches that affected video game companies like Sony and Turbine last year, our coverage was written with an eye toward the big picture problem of data breaches in general and compromised credit card information. So expect us to try and tie it all together through our focus this week.

Also …

And one last thing to consider if you are a merchant and you are worried about data breaches affecting your bottom line: Host Merchant Services Data Breach Security Program. Click that link to download a PDF explaining the value-added service HMS provides its merchants that goes above and beyond just simple PCI Compliance and helps ensure a merchant’s peace of mind.