By Dr. Heather Mark

On March 19, 2019, well-known and respected security researcher and reporter Brian Krebs, posted an article with the headline, “FaceBook Stored Hundreds of Millions of User Passwords in Plain Text for Years.”  The article states, “According to Krebs, “The Facebook source said the investigation so far indicates between 200 million and 600 million Facebook users may have had their account passwords stored in plain text and searchable by more than 20,000 Facebook employees.” With that in mind, think about how many accounts you have linked to Facebook.

The news is a constant parade of security breaches in which user names and passwords are compromised.  It is easy for people to become numb to that, or to think that it’s “only” a username and password, not financial data. But how many of us use the same password, or a close variation, for several of our accounts, including our work passwords?  Take a look at this list of security breaches, and think about how many of those impact you, and how many times you recycled passwords for those accounts.

Though it can be convenient, reusing passwords does put you at risk for further compromise.  As criminals have become more sophisticated, they’ve taken to aggregating data collected from various breaches and extrapolating it to compromise accounts that you might not even know were in danger.  Do you use the same password for social media as you do for your bank account?  You might not be concerned if your social media password was compromised, but what if the hacker were able to discern your bank or financial institution?  Have you ever posted a complaint or comment about your bank? Do you check into your office on social media?

We’ve all read the stories about people using “password 123” or “changeme!” for their passwords.  Not only are those easy to crack, but they’re painfully ubiquitous.  Here are some quick, easy tips for creating a strong password:

  • Use phrases – think about a line from a favorite book, movie or song. Sometimes, that can actually be easier to remember and it’s inherently more complex.  Particularly if it uses punctuation.
  • Use “special” characters – When we think of “special” characters, we tend to default to the “!” or the “*”. They’re easy to remember.  But the poor semi-colon (“;”) is woefully underused.  As is ampersand (“&”) and the tilde (“~”).  Think creatively about which special characters you’re using in your password and how you’re using them.  For example, you can combine special characters to make emoticons.
  • Mix up numbers and letters – a creative mix of numbers and letters can make a password more difficult to guess. Try not to make obvious substitutions, such as using a ‘”3” instead of an “e”.
  • Use capital and lowercase letters – mix up your use of capital and lower case letters. You don’t have to follow grammatical conventions when creating strong passwords.  You don’t have to start a name with a capital letter.

Another important reminder is to change your password regularly.  It can be easy to forget that, particularly in the age of biometric authentication.  One trick that I use is to set a calendar reminder to change my passwords.  You can choose every 30, 60, or 90 days, but it’s best not to go past the 90 day mark.

It can be hassle to come up with and remember new passwords every 90 days, but using new, unique passwords is an important tool to protect yourself and your business. It pays to be smart!

Is PCI DSS Compliance Enough?

By Dr. Heather Mark

In the wake of yet another massive data breach, media outlets around the world are asking a lot of questions.  More questions, it seems, than are the victims of the data breach.  People seem to have become numb to loss of sensitive data.  But while individuals seem to carry on as though nothing has changed, businesses need to be cognizant of the consequences of data breach, beyond simply the penalties associated with a violation of the PCI DSS.  The consequences of data breach can be swift and severe.  In fact, a class action suit has already been filed against Marriott stating that the breach should have been detected four years ago.  Further, companies that fall victim to hackers can expect to play host to government regulators, state attorney generals, forensic investigators and other third parties for a significant length of time. So what is a company to do to protect its data?

I once had a self-proclaimed “grey hat hacker” tell me, “your company has to find and fix every single hole in the environment.  I just need to find one.  And I’ll spend 24/7 to do it.”  That demonstrates the reality that data security in the online world, our world, can be a tremendous task.  However, as with all types of crime, there are methods that can be employed to increase the work factor for criminals in compromising your environment and to make your business a hard, or at least a harder, target.  Those criminals looking for just an “opportunity” may determine that there are easier targets and move on.

The most obvious step to be taken is compliance with the PCI DSS. The Standard has been in place since 2006 and serves as an excellent baseline of security.  All companies that store, process, or transmit cardholder data (or can otherwise impact the security of the transaction) must comply with the Standard.   Though compliance must be validated once a year, it is important to maintain compliance throughout the year through the implementation of a robust compliance monitoring program. It will require ongoing management to ensure that a company doesn’t inadvertently fall out of compliance without taking a corrective action.  Further, failing to comply can result in financial penalties. It’s important to note, though, that PCI DSS only applies to credit and debit card numbers.  Its scope does not include any other form of potentially sensitive information.

As we’ve seen from countless headlines, data breaches don’t just involve payment card numbers.  They often include data such as email addresses, usernames, passwords, physical addresses, social security numbers and other similarly sensitive data that aren’t contemplated by the PCI DSS.  What should companies do then?  Well, the PCI DSS still serves as a useful launching pad.  But before determining how far to extend those protections and controls enumerated in that standard, it helps to conduct and exercise known as a data inventory.

Simply put, a data inventory is an exercise in which each functional area of the company examines the data that it uses and why, how it’s collected, stored and shared, and how the data is destroyed or disposed of when it’s no longer needed.  These exercises can be eye-opening and are extremely useful.  It is not uncommon to unearth data collection or use practices that were not widely known in the organization.  These data knowledge gaps can lead to critical holes in the control environment, exposing companies to risks of which there were not even aware.  More importantly, it can help organizations make informed, risk-based decisions about the type of information that it collects (i.e. do we, as an organization, need to collect this data element to fulfill our business objectives?  If so, what types of protections must we afford that data?  Is it ultimately worth the investment?) Once the data inventory is complete, you may find it helpful to see how or if it is feasible to extend PCI DSS controls that are already in place to cover these additional data elements and the larger data environment.

Further, it may be discovered during this inventory, that the organization may have additional regulatory obligations as a result of the data it collects.  For example, is the company storing data related to healthcare, education, or financial accounts?  Doing the inventory can assist and support the organization in its regulatory risk assessment.  Proactively identifying potential compliance gaps is always better than having such gaps identified by auditors, regulators, or clients. If these additional regulatory obligations are discovered, it can be helpful to map controls between those PCI requirements that the organization is meeting to the newly identified regulatory requirements.  There will still be gaps to be addressed, but by extending the PCI DSS control environment, organizations may be able to significantly reduce the cost of expanding those protections to other forms of data and other data environments.

Granted, the discussion presented here is more nuanced and robust than the constraints of a blog post may allow, but it does provide us all food for thought.  If the only data that is possessed by an organization is payment card data, then perhaps PCI DSS compliance is sufficient protection.  However, such an organization, to use the popular language of the day, is something of a unicorn.  Most organizations host a wide variety of data – data that is regulated and data that a company may simply want to protect, such as proprietary code, formulas, or business plans.  For those organizations, compliance with PCI DSS is just the tip of the iceberg.  I’ll leave you with this direct quote from the PCI DSS v 3.2.1: “PCI DSS comprises a minimum set of requirements for protecting account data, and may be enhanced by additional controls and practices to further mitigate risks, as well as local, regional and sector laws and regulations. Additionally, legislation or regulatory requirements may require specific protection of personal information or other data elements (for example, cardholder name). PCI DSS does not supersede local or regional laws, government regulations, or other legal requirements.”

By Dr. Heather Mark, CCEP

Aristotle wrote that ethics is the habituation of right action.  Essentially, we don’t know what’s right out of the starting gate.  The virtue of ethical behavior is one that we acquire through example and guidelines.  We become ethical, or as Aristotle would have it, virtuous, through practice.  The more we practice right action, the more innate it seems to become.  It’s not an inherent knowledge, it’s a learned trait.  This discussion from Aristotle’s classic work Nicomachean Ethics is a great description of the important interrelatedness of compliance and ethics, particularly in the Payments industry.

The payments industry is highly complex and highly regulated.  It’s unlikely that a person new to the industry would walk in and be able to identify right from wrong, speaking in regulatory sense.  The lattice of regulation created by the card brand rules, state and local laws, as well as federal regulation, and potentially international laws, can cause confusion even among well-entrenched payments professionals.  If you were to overlay that with the development of new business models, such as payment facilitators and marketplaces, the landscape quickly becomes treacherous.  This is where a robust Compliance[1] and Ethics program comes into play.

As Aristotle says, a good government will attempt to legislate virtuous behavior to help its citizens learn to act “virtuously.”  Eventually, its citizens learn to extrapolate that virtuous behavior beyond those circumstances contemplated by law, and simply behave in a “right” manner.  Leaving behind for the moment arguments about legislating morality, let’s focus on the notion that laws act as a guideline for behavior in the absence of an inherent understanding.  The compliance program acts as that guideline for the uninitiated.  Without long experience or an inherent understanding of the potential pitfalls of non-compliance in the payments space, the compliance program acts as the framework for what’s right and wrong, in a regulatory context.

Virtue, or to use the word that is more familiar to us, ethics is, according to Aristotle, what makes something perform well.  So it follow suit then, that an ethical company would perform well. It’s in the best interest of the company, then, to ensure that its team members are inclined to act in a way that is ethical.  That means enabling merchant, service providers, and partners to conduct their business in a way that complies card brand rules. That also means recognizing that simply because we can do something, it doesn’t mean we should.  We’ve seen this play out in the rise of Fintech.

Fintech is an exciting wave of innovation that has been transforming the payments space over the course of the last ten years.  Agile, creative companies have been developing new ways for merchants to engage with their customers.  Things that we already take for granted, such depositing paper checks from our phones, or paying our friends back for lunch through text messages, are just some of the examples of the innovations borne of the Fintech revolution.  But there were some downsides to that rush to the payments space, too.  While the vast majority of new Fintech players took the time to learn the payments space, to understand the regulatory environment, and to play according to those rules, there were a few players that saw an opportunity to cash in on the changing industry.  Software developers without an understanding of the complexities of the space made decisions, which in retrospect, were not founded on a complete understanding of the risk involved, or of the impact it might have on the end user. With a robust and mature compliance program in place, it’s possible that those companies may have avoided those missteps.

In organizations with a mature program in place, compliance is “business as usual,” baked into product development.  The compliance team scopes out potential regulatory roadblocks so that the product and development teams can design with those regulatory requirements in mind.  Additionally, it serves as a learning opportunity, as those teams begin to acclimate to the regulatory environment in which they operate.  They incorporate those requirements as they evolve that product set or the feature set for particular verticals.  They learn the questions to ask when a new project comes along.  The regulatory requirements become just a fact of life, doing things the right way.  In Aristotle’s words, they become habituated to it.  Compliance serves as the touchstone on which companies and organizations can build an ethical culture.

Ethics, then, derives from the repeated practice of doing the right thing, such that when a specific guideline doesn’t exist, one can still determine the right course of action. Eventually, Aristotle says, people will reach a state in which they do the right thing because it is the right thing, not because the law mandates it.  Ethics programs are natural extensions of compliance programs, as companies should empower their staff and contractors to do the right thing, even when it’s difficult. Ethics programs are designed to allow employees to report, without fear of retribution, actions that they genuinely feel violate the organization’s Code of Conduct or Compliance policies.

The importance of having an ethical culture can’t be overstated.  It is what keeps employees invested in the organization and what maintains relationships with clients and partners.  As a side benefit, it helps companies to avoid potential violations of regulatory mandates.  Those violations can result in monetary fines and penalties, compensation to affected parties, and government oversight.  Ethical and compliance violations also lead to lost revenue as a result of reputational damage.  Clients and prospective clients will be reluctant to sign a contract with a company with a demonstrable track record of ethical issues.

What does all this mean to the payments industry?  The industry is predicated on what can be a quickly shifting foundation of the intersection of technology and regulation. Maintaining an operational understanding of the relationship between the two is a vital requirement in any partner or service provider in the industry.   That means that companies that aren’t willing or able to make an investment in maturing their Compliance and Ethics programs are at a competitive disadvantage.  Between card brand regulations, state laws on money transmission, data security and privacy, and federal laws, it quickly becomes imperative for companies to choose a service provider that can help them navigate the compliance landscape, while staying on the forefront of payment technology.  It’s a delicate balance.  What’s more, it’s important to work with a company that can practice some foresight with respect to the potential impact of forthcoming legislation.  Again, this is something that ethics can help accomplish – often doing what’s right to start with can help head off potential issues with future legislation.  An example can be found in the use of mobile payment applications.

Installing an application on a mobile device can provide the software manufacturer with a wealth of information – contacts, geolocation, app and device usage.  All of this data is incredibly useful for marketing purposes, but collecting that data without the express consent of the end-user is problematic, to put it mildly. A number of mobile payment providers were collecting this information and using “big data analytics” and sharing it with third parties.  In fact, that practice led to a number of Congressional hearings on the matter.  This is why users now have the option to turn off location services and apps now disclose what they track.  This same issue is still playing out in the Cambridge Analytics issue with Facebook.  These issues could have been avoided with the adoption of a mindset that says, “Just because we have the technology to do something, that doesn’t mean that we should do it.”  This, again, derives from ethical culture and transparency to both end-users and partners.

Sphere is dedicated to the proposition that a payments company cannot be successful without a strong Compliance and Ethics program.  Since its inception, Sphere recognized the unique position and responsibility that it has to maintain an environment that fosters ethical behavior.  To do so, it is necessary to develop and maintain a Compliance program that serves, not just Sphere, but its clients and partners, as well.  At the end of the day, developing such a program is just another way that we serve our clients.

[1] For the purposes of this discussion, I include security requirements in the compliance discussion.

Event Schedule 2019

The Sphere teams will be exhibiting at a variety of payments and industry events. Come visit us! We have exciting news to share about our products and services.

 

 

 

 

HIMSS19

February 11-15 | Orlando

Visit us at Booth #2679

GE WRUG

February 14-15 | Las Vegas

Collaboration of Revenue Cycle Epic Users (CORE) West

February 27-March 3 | Las Vegas

ACN International Training Event

March 9-11 | Sydney

ACN International Training Event

March 29-31 | Charlotte, NC

Collaboration of Revenue Cycle Epic Users (CORE) East

April 10-12 | Pittsburgh

OCHIN Learning Forum

April 16-18 | Portland

Dr. Heather Mark, CCEP

In May of this year, South Carolina became the first state to officially adopt the National Association of Insurance Commissioners (NAIC)’s Model Law on CyberSecurity.  While the law is a first in that it’s specific to the insurance industry, many organizations that have already adopted controls for SOX, PCI DSS, and HIPAA, to name few, may find its implementation less onerous that it might appear at first glance. As the deadline for implementation (January 1, 2019[i]).fast approaches, it is worth looking at the requirements of the Model Law and the impact the Law will have on the industry as a whole.

The Act requires persons licensed to operate under the insurance laws of the state to enact a minimum level of data security controls be implemented to protect non-public information.  Interestingly the law takes a broader definition of non-public information than may state data security or data breach notification laws. For the purposes of this law, not only is the personal information of the consumer to be protected, but the law also specifically calls for protection for “business-related information of a licensee the tampering with which[sic], or unauthorized disclosure, access, or use of which, would cause a material adverse impact to the business, operations, or security of the licensee.”  It is unusual in data protection or data privacy law to see a requirement to protect the information of businesses, but in this instance, it is an obvious broadening of protections.  Licensees may in fact be individual agents, so the protection of their information is akin to the protection of employee information, such as those protections included in California’s Consumer Privacy Act.  (As a side note, a wonderful analysis of the CCPA is available on the International Association of Privacy Professionals website).

As I stated, those organizations that already have experience with SOX, PCI DSS, or HIPPA may recognize quite of few of the requirements of the South Carolina Insurance Data Security Act.  Many of the elements are considered by security professionals to be “table stakes,” minimum requirements for doing business securely in today’s environment.  These controls include:

  • A risk assessment;
  • A written information security policy that is commensurate with the size and complexity of the licensee’s organization and is based on the risk assessment;
  • One or more employees that are designated as being responsible for the licensee’s information security program;
  • A vendor management program;
  • An Incident Response Plan, which includes a data breach notification process; and
  • An annual attestation submitted to the Director of the Department of Insurance.

What’s interesting to note here, and is a position that I’ll often profess, is that in many cases compliance can be a byproduct of good Governance, Risk, and Compliance (GRC) programs.  Companies that are well-versed in GRC and information security may already have these measures in place, irrespective of any regulatory obligation to do so.  Those organizations are well-positioned when a state then adopts new security rules.  In those cases, the organization may be required to make some changes to its processes, but may avoid the total overhaul that a company less familiar with GRC practices may find themselves undertaking.

The South Carolina law is very similar to the New York Data Security Act, which was passed in 2015. In addition, as alluded to in the introductory paragraph, the law is essentially an adoption by South Carolina of the NAIC’s Model Law.  NAIC is actively encouraging states to adopt the laws and has even “recommended that Congress should consider preempting the states if it is not adopted in 5 years.”  More information can be found on the Model Law at NAIC’s website.   Over the coming years, it will be interesting to observe the trend at the state level in terms of adoption of the Model Law.  This  might just prove to be a good time for a forward-thinking compliance officer to begin crafting a program to incorporate some of the clauses in the Model Law.

[i] The state has enacted an extended deadline for portions of the law.  These deadlines are:
July 1, 2019 for Section 39-99-20
July 1, 2020 for Section 39-99-20(f)