In this article we look at PCI DSS Non-Compliance Consequences…
…what it refers to, and the risk posed by data breaches. Non compliance refers to any business that does not adhere to the protocols set out by the PCI Security Standards Council. Throughout this article we will look at this in greater detail and what the outcome is when breaches occur because of not being compliant.
The security standard was created to protect debit and credit card information for companies that handle sensitive card information. It’s important to remember that the standard protects both the companies that handle transactions and their valued customers.
Being Non-compliant Can Have Several Implications For Businesses, Including:
To avoid these outcomes, it’s essential for businesses to regularly assess their compliance with PCI DSS. Implementing required security measures and ensuring that they remain in compliance over time. This often involves regular security audits, vulnerability assessments, and rectifying any identified security gaps.
Are the Financial Implications Significant for Mid-sized Businesses?
It’s important to understand the significant financial impact a PCI compliance breach can have on both small and medium-sized businesses.
According to IBM’s 2023 Cost of a Data Breach Report, organisations with fewer than 500 employees face an average cost of approximately £2.7 million per data breach incident. The average cost for each compromised record stands at around £134. Basys states that recovering from a data breach for each compromised card number costs around £175.
The data also indicates a concerning trend: 70% of small to medium-sized businesses do not recover from a data breach. Underscoring the critical importance of PCI compliance for business longevity and financial stability.
These figures underline the essential need for businesses, particularly SMBs, to rigorously maintain PCI compliance. This compliance is not just a regulatory requirement but a crucial investment in the business’s security and sustainability.
You Are PCI Non Compliant if you do not Adhere to the Security Standards Set by the PCI DSS
Compliance means following rules to keep credit card information safe for companies. It includes requirements for processing, storing, and transmitting data securely.
The main points of PCI DSS compliance include:
Build and Maintain a Secure Network and Systems:
- Install and maintain a firewall configuration to protect cardholder data.
- Do not use vendor-supplied defaults for system passwords and other security parameters.
Protect Cardholder Data:
- Protect stored cardholder data.
- Encrypt transmission of cardholder data across open, public networks.
Maintain a Vulnerability Management Program:
- Protect all systems against malware and regularly update anti-virus software or programs.
- Develop and maintain secure systems and applications.
Implement Strong Access Control Measures:
- Identify and authenticate access to system components.
- Restrict physical access to cardholder data.
Regularly Monitor and Test Networks:
- Track and monitor all access to network resources and cardholder data.
- Regularly test security systems and processes.
Maintain an Information Security Policy:
- Maintain a policy that addresses information security for all personnel.
Does PCI Non-Compliance Have Significant Consequences?
A notable example of PCI DSS non-compliance is the data breach that occurred at British Airways (BA) in 2018. The breach exposed the personal and payment information of approximately 380,000 customers. Hackers accessed BA’s website and app, stealing customer data during a two-week period.
The Information Commissioner’s Office (ICO) initially announced its intention to fine British Airways a record £183 million for the breach. The company’s poor security measures allowed hackers to steal payment card information, names, addresses, travel details, and logins. COVID-19’s impact on the airline’s finances led to the reduction of the fine to £20 million.
This incident highlighted the significant financial risks associated with non-compliance with PCI DSS, as well as the reputational damage that can result from failing to protect customer data. It also serves as a stark reminder of the importance of maintaining robust cybersecurity measures to comply with data protection standards and safeguard against data breaches.
Is PCI Non Compliance Common?
PCI (Payment Card Industry) non-compliance is relatively common among businesses, especially small and medium-sized enterprises. Often because of the lack of resources or expertise to fully adhere to the PCI Data Security Standards (DSS).
The main points of PCI DSS compliance include:
Lack of Awareness:
Some businesses are not fully aware of their obligations under PCI DSS or do not understand the specific requirements.
Resource Constraints:
Implementing the stringent security measures required by PCI DSS can be resource intensive. Smaller businesses, in particular, may struggle with the costs and manpower required.
Complexity of Compliance:
The standards are detailed and can be complex, especially for businesses without dedicated IT security teams.
Rapid Technological Changes:
Keeping up with evolving technology and the corresponding changes in security standards can be challenging for businesses.
Overlooking Risks:
Some businesses do not understand the risks of not following rules. These risks include data breaches and fines. They may only realise the importance of following rules after experiencing a security problem.
Large companies may have difficulty following rules because of their size and complexity, despite having ample resources available. Non-compliance can result in significant penalties, increased transaction fees, and reputational damage, among other consequences.
Are SMBs at Increased Risk of PCI Non-Compliance?
Small and medium-sized businesses (SMBs) are often at greater risk of PCI DSS non-compliance. This is mainly because there are not enough resources, strict security measures, and employees who don’t know or understand the compliance rules.
Unlike the majority of larger corporations that have dedicated teams and significant resources to ensure compliance and secure data. Small businesses may have limited resources, leading to gaps in security and compliance measures.
Firstly, SMBs may not have the same level of cybersecurity awareness or expertise as larger enterprises. This lack of knowledge can result in a failure to recognise the importance of PCI DSS compliance and the potential risks associated with non-compliance.
Small businesses that do not have the correct security measures in place can make them vulnerable to data breaches. This can also lead to penalties for not complying with regulations.
Secondly, the financial implications of non-compliance can be more severe for SMBs. The fines and costs associated with a data breach or non-compliance can be substantial relative to the size of an SMB. Big companies can handle these costs, but for small businesses, they can be devastating, and in some cases can lead to bankruptcy or closure.
Additionally, SMBs often become targets for cybercriminals precisely because attackers perceive them as having weaker security measures. Hackers may view SMBs as the low-hanging fruit, expecting easier access to sensitive data due to less sophisticated defence mechanisms.
Once compromised, the impact on an SMB’s reputation can be devastating, leading to a loss of customer trust, which is more challenging for smaller businesses to rebuild.
The consequences of non-compliance can be disproportionately severe for these smaller companies. The need for heightened awareness and proactive measures to ensure compliance and protect sensitive data is even more important.
Did You Know That Company Directors can be Personally Liable for PCI Non-Compliance!
Directors are responsible for ensuring DPA 2018 and GDPR compliance because of their role in the strategy and governing of organisations. Ensuring compliance with PCI DSS is integral to safeguarding sensitive cardholder data against breaches and fraud.
Directors’ duties include overseeing the implementation of effective data security measures. This includes maintaining a secure transaction environment and ensuring that the company adheres to legal and regulatory requirements.
Not following PCI DSS rules can lead to substantial fines, legal repercussions, and damage to a company’s reputation. Directors must make sure their organisations have strong data security to prevent risks with payment card transactions. Ultimately, they are responsible for this.
Can PayGuard Help Me with Compliance?
Sure! Although PCI DSS Compliance is complex we can help your business, no matter the size. Helping to remove companies out of the scope of PCI Compliance amongst many other compliance requirements.
Contact us below to learn how we can help your organisation.
