Quick Hits:
Any organization that interacts with cardholder data must be PCI compliant.
Companies that don’t meet PCI DSS requirements can expect fines from payment processors.
PCI DSS non-compliance also dramatically increases the likelihood, and consequences, of a data breach.
What is PCI DSS Compliance?
The PCI DSS (Payment Card Industry Data Security Standard) is a standard that was created by major card brands to standardize the requirements for securing cardholder information. The 12 PCI DSS standards create a complex compliance framework enforced by the PCI Security Standards Council. These standards are established and enforced by major credit card companies and payment card brands to protect cardholder data.
PCI compliance is determined by a yearly assessment of cybersecurity practices surrounding cardholder information. Businesses must follow a structured compliance journey to achieve and maintain PCI DSS compliance.
Who Needs to be PCI Compliant?
Every organization that handles cardholder data must be PCI Compliant. While the PCI DSS is not a law, and is not enforced by the government, PCI Compliance is strongly enforced by payment networks and the PCI Security Standards Council. These entities enforce compliance through regular assessments and by monitoring organizations' compliance status, ensuring that merchants and service providers maintain current PCI DSS standards.
What Does PCI Non-Compliance Look Like?
PCI non-compliance is, simply put, failure to meet any of the PCI DSS requirements. This could look like any of the following:
Improperly installed or maintained firewall configuration
Anti-virus software that hasn’t been updated
Use of vendor supplied defaults for system passwords
Physical access to cardholder data is not properly restricted
Cardholder data is not properly restricted on a need-to-know basis
No regular testing of security systems and processes
Implementing secure practices and robust information security measures, such as encryption, proper data handling, and comprehensive security policies, is essential to prevent these issues and maintain compliance status.
These are just a few of many potential security issues related to protecting cardholder data. Because of this, it is important to take time to fully understand PCI DSS requirements; ongoing PCI DSS training is essential for staff to maintain compliance and avoid common pitfalls. Non-compliance can be a serious issue for any organization. There are many consequences to not being PCI compliant, and we’ll look at the top five today.
PCI DSS Penalties for Non-Compliance
Fines and Penalties
Fines from payment processors can cause a huge financial burden for companies that are not compliant with PCI DSS. Fines will vary based on the size of the business and the scope of the breach. Penalties will usually range from $5,000 to $100,000 a month until the issue is fixed and the company attains compliance.
Fines of $100,000 a month are more likely for large Level 1 companies that process over 6 million card transactions a year and have been non-compliant for several months. Smaller businesses, like Level 4 businesses that process under 20,000 card transactions a year, will pay fines closer to $5,000. PCI DSS compliance levels are determined by the amount of card transactions a company processes. Monthly fines increase based on the size of the company and the time that the company has spent out of compliance.
Penalties are usually transferred from the card brand to the payment processor, then from the payment processor to the company that violated PCI DSS. Because of this, penalties will vary between payment processors. Some payment processors may even charge additional fines on top of the penalties they must pay to the card brand. In addition to these, companies may also face additional penalties from regulatory bodies or for failing to meet other PCI Security Standards.
All of these fines exist even if your company’s non-compliance does not end in a data breach. However, not all of these fines exist even if your company’s non-compliance does not end in a data breach. However, non-compliance creates security issues that are easily exploited by hackers looking to steal cardholder data. If a breach compromises cardholder data or credit card data, the resulting fines and penalties can be even more severe. Non-compliance increases the likelihood of a data breach, especially if your company is not compliant for a long period of time. Non-compliance can also affect the aftermath of a data breach, which is what we’ll look at next.
Maintaining PCI DSS compliance is essential to avoid PCI fines, non-compliance fines, and to protect sensitive card data.
Data Breach Compensation Costs
If your company suffers a data breach while non-compliant, your company will be responsible for compensation costs alongside other potential fines. Compensation costs are the costs associated with helping customers whose data has been compromised, including support for each affected customer and the importance of assisting them after a breach.
This can include free credit card monitoring for customers, identity theft insurance, and even some service fee reimbursements. Cost will also likely include card replacements, which can range from $3-$5 per customer and will add up quickly when a large number of cards are compromised. When a data breach occurs, the loss of customer data can lead to additional costs and legal obligations for your business.
While PCI DSS does not guarantee safety from data breaches, a company that suffers a breach while PCI Compliant is less likely to suffer a breach and may have the associated fines lowered or eliminated. In the event of a breach, compliance still holds weight and shows that your company has not been negligent with PCI DSS security requirements. Data theft and other security incidents can have long-term financial and reputational consequences for your business.
Legal Action
If PCI DSS non-compliance leads to a data breach, customers may choose to take legal action. A PCI DSS violation or PCI violation can also be used as evidence in legal proceedings. Lawsuits, or multiple lawsuits, are possible in any data breach. However, if you are not PCI compliant, customers and card brands can easily show your company’s negligence. Payment card brands and credit card companies may also pursue legal action or impose penalties for PCI DSS violations. If your business faces litigation on multiple fronts, whether from multiple customers or card brands, legal costs alone can be enough to cripple your company.
Damaged Reputation
Endangering a customer’s data not only comes with fines and lawsuits, but it can also cause irreversible damage to your company’s reputation. It is crucial to protect customer data to maintain trust and demonstrate your commitment to data security. Once your company has experienced a data breach, the customers affected may never have the same level of trust in your company again.
Customers may be especially concerned about the security of their credit cards and payment cards, fearing their sensitive information could be at risk. Even unaffected customers may lose trust in your company, reasonably worried that their information may be compromised in the future.
Your company’s damaged reputation will also incentivize hackers by revealing that your company has been operating below standard. Not being PCI compliant is a huge data breach risk. If not fixed quickly, these weaknesses in your company’s security can be leveraged by hackers, leading to a data breach, which only increases the risk of more attacks.
Revenue Loss
Not only does PCI non-compliance come with financial costs, but any damage to your brand’s reputation can dramatically decrease revenue generation. Disruptions to payment transactions and the loss of compliance status can further impact revenue, as customers and partners may lose confidence in your ability to securely handle sensitive data. In the case of a data breach, your company will have to juggle both the cost of the breach and the decreased revenue from scared or unsatisfied customers.
Customer trust cannot be easily earned back once it has been lost. No matter how well your company responds to a data breach, some customers may never return. Others may be hesitant, waiting to see what actions your company takes to resolve the issue.
Maintaining PCI compliance is crucial to prevent data breaches, but also to win trust once a breach has taken place. A well-managed compliance journey, including secure systems that properly transmit cardholder data, is essential for long-term business success. The ability to show customers that you are compliant with PCI standards won’t fix a breach, but it can be a step in the right direction.
How to Prevent PCI Non-Compliance
PCI DSS was created to protect cardholder data, and not complying with its recommendations means your company is operating below the bare minimum of security efforts. It is crucial to be PCI DSS compliant and follow all relevant standards, including PIN transaction security, to ensure comprehensive protection. While data breaches are not a guaranteed outcome of PCI non-compliance, not adhering to PCI standards means that there are gaps in security that hackers can exploit. While no company wants to receive fines for PCI non-compliance, the costs of a data breach can be far worse.
So how do you attain PCI compliance?
PCI compliance can be a lengthy, and expensive process. However, for companies that store their cardholder data outside of your internal systems, you can dramatically reduce the scope of your PCI audits and easily attain compliance. Check out IXOPAY tokens to see how you can secure your cardholder data in a way that reduces your compliance burden and eliminates the risk of cardholder data exposure in the event of a breach.
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