Feeds

FTC settles with CardSystems over data breach

Forced to tighten security measures and undergo audit

Website security in corporate America

A payment processor that exposed 40m credit cards to the risk of fraud when a hacker took advantages of security failures has agreed to settle Federal Trade Commission (FTC) charges. Independent security audits will now be required every other year for 20 years.

CardSystems Solutions and its successor Solidus Networks (which does business as Pay By Touch) are also obliged to implement a comprehensive information security programme.

The case hit the headlines in June last year after it was revealed that security vulnerabilities in the systems of Tucson-based CardSystems had allowed a hacker to infiltrate its network and access cardholder data, putting cards of all brands at the risk of fraud.

According to the FTC, CardSystems provided merchants with products and services used in "authorisation processing" – obtaining approval for credit and debit card purchases from the banks that issued the cards. In processing these transactions, CardSystems collected personal information from the magnetic strip of the card, including the card number, expiry date, and other data. CardSystems then stored this information on its computer network.

The watchdog charges that CardSystems failed to provide reasonable and appropriate security for this sensitive consumer information.

According to the complaint, CardSystems not only created unnecessary risks to the information by storing it, but it did not then adequately assess the vulnerability of its computer network to commonly known or reasonably foreseeable attacks.

The company did not implement simple, low-cost, and readily available defences to such attacks, nor did it use strong passwords to prevent a hacker from gaining control over computers on its computer network and access to personal information stored on the network.

In addition, the FTC says, CardSystems did not use readily available security measures to limit access between computers on its network and between its computers and the internet, nor did it employ sufficient measures to detect unauthorised access to personal information or to conduct security investigations.

"CardSystems kept information it had no reason to keep and then stored it in a way that put consumers' financial information at risk," FTC chairman Deborah Platt Majoras said. "Any company that keeps sensitive consumer information must take steps to ensure that the data is held in a secure manner."

The security breach resulted in millions of dollars in fraudulent purchases and caused banks to cancel and re-issue thousands of credit cards. On top of this, consumers experienced inconvenience, worry, and time loss dealing with the affected cards, according to the FTC.

See The FTC complaint.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Protecting users from Firesheep and other Sidejacking attacks with SSL

More from The Register

next story
Early result from Scots indyref vote? NAW, Jimmy - it's a SCAM
Anyone claiming to know before tomorrow is telling porkies
Home Depot: 56 million bank cards pwned by malware in our tills
That's about 50 per cent bigger than the Target tills mega-hack
Hackers pop Brazil newspaper to root home routers
Step One: try default passwords. Step Two: Repeat Step One until success
UK.gov lobs another fistful of change at SME infosec nightmares
Senior Lib Dem in 'trying to be relevant' shocker. It's only taxpayers' money, after all
Critical Adobe Reader and Acrobat patches FINALLY make it out
Eight vulns healed, including XSS and DoS paths
Spies would need SUPER POWERS to tap undersea cables
Why mess with armoured 10kV cables when land-based, and legal, snoop tools are easier?
TOR users become FBI's No.1 hacking target after legal power grab
Be afeared, me hearties, these scoundrels be spying our signals
Blood-crazed Microsoft axes Trustworthy Computing Group
Security be not a dirty word, me Satya. But crevice, bigod...
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.