Another big data breach?

It looks like there has been another data breach at a large credit card processing operation. The details haven’t been made public yet, but it’s already being discussed on web sites that track data breaches. As soon as the forensics experts finish collecting the evidence that they need, there will probably be a public announcement that describes exactly what happened. We’ll probably find that the operation that has hacked has passed their PCI DSS audit yet was still vulnerable to hackers. This shouldn’t be too surprising to anyone by now. It probably shouldn’t even be considered newsworthy any more.

As I’ve mentioned before, there are good reasons to require any business that handles credit card transactions to be PCI DSS compliant. Credit card numbers are the main target of the determined cyber-criminals that are part of the multi-million dollar underground economy in sensitive information. The number of stolen credit card numbers outnumbers other sensitive information that’s traded by cyber-criminals by roughly a factor of 20 to 1, so they’re much more popular than even information like ATM PINs or bank account numbers.

Even though many politicians seem painfully oblivious to it, the law of supply and demand affects all markets, even those in stolen sensitive information: as the number of credit card numbers stolen in data breaches has increased dramatically over the past few years, the value of each stolen credit card number has dropped just as dramatically. This means that cyber-criminals now need to get millions of credit card numbers from a single hacking operation to justify the risk and the expense of such an operation. This seems to have led them to target credit card processing operations instead of merchants, and they’ve apparently been fairly successful at this, despite the increased level of security that the PCI DSS have required. This is probably because the evolution of the PCI DSS wasn’t designed to keep up with the current threat.

The first version of the PCI DSS didn’t require much more than what are considered best practices for information security. The subsequent versions increased the level of security required, and future versions will probably increase it even more. This has been a gradual and incremental process, and it clearly hasn’t kept up with the threat that professional cyber-criminals pose. As long as this process stays gradual and incremental, it seems likely that the cyber-criminals will be able to stay ahead of the security that PCI DSS compliance requires. What’s probably needed is a bigger step forward in security, and the combination of encryption and key management is probably the way to make that step.

The current version of the PCI DSS requires encryption of sensitive cardholder information, but it doesn’t require particularly strong key management processes, even though strong encryption and key management provide the basis for protecting sensitive information against even the most determined cyber-criminals. That’s how national governments protect their diplomatic and military secrets, after all. It seems to have worked fairly well for them, and there’s no reason to believe that the same model can’t also be applied to protecting other types of sensitive information. Any other way seems to be too weak to stop determined adversaries.

If the PCI Security Standards Council is serious about protecting sensitive cardholder information, and there’s no reason to believe that they’re not, we’ll probably see strong encryption and key management required in future versions of the PCI DSS. Until then, we’ll probably see more of the large-scale data breaches that have been in the news recently.

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