TJX Agrees to Pay $10,000,000 in Fines for Data Breach
According to the article below, the TSX chain data breach is the worst data breach in retail history. More than 100 million payment cards were apparently compromised in one way or another. It’s easy to get bogged down and become anxious about whether or not your business is in danger. The best thing to do is to consult your credit card processing provider and ask them about how you can become PCI compliant. It’s a good idea to find a company that also includes PCI Compliance INSURANCE within their PCI Compliance program. This will prevent you from suffering a debaucle like TJX!
The Merchant Maven
After a probe and negotiations lasting 2-and-a-half years, the TJX chain agreed on Monday (June 22) to pay a group of 41 U.S. states $9.75 million for what appears to be the credit card industry’s worst data breach, a crime that touched more than 100 million payment cards and was revealed in January 2007.
But the dollars behind the settlement are relatively trivial for the $19 billion owner of Marshalls, T.J. Maxx, HomeGoods, A.J. Wright, HomeSense and Winners.
The biggest impact will likely come from a wide range of security concessions, although many of the rules had already been directly or indirectly required by existing PCI guidelines.
Among the security agreements detailed in the pact:
• Upgrade WEP wireless systems to WPA “or wireless systems at least as secure as WPA.” (The current PCI version says that “new implementations of WEP are not allowed after March 31, 2009″ and that “current implementations must discontinue use of WEP after June 30, 2010.”)
• Not store the full contents of the magnetric stripe but it may store “a portion of the contents of the magnetic stripe” as long as it’s only for “a period of time for legitimate business, legal or regulatory purposes.” (That seems to be lifted intact from PCI 1.2 section 3.1.) But like PCI, the states made no attempt to limit that “period of time” nor what might constitute “legitimate business” purposes.
• Use VPNs “or other methods at least as secure as VPNs for transmission of personal information.”
• TJX seems to have agreed to participate in any security-related trial if invited to do so, with the only limitation being that TJX can determine “in good faith” that “the terms and conditions of such participation” would be “feasible and reasonable.”
• Here’s an interesting one to try and enforce. “TJX will take steps over the 180 days,” the agreement said, “to encourage the development of new technologies within the Payment Card Industry to encrypt cardholder information during some or all of the bank authorization process with a goal of achieving ‘end-to-end’ encryption of cardholder information” which the filing defined as “from PIN pad to acquiring bank.” (Seems as though a single E-mail saying “Good idea, guys!” would pretty much fulfill this obligation.)
• “Segment appropriately from the rest of the TJX computer system those network-based portions of the TJX computer system that store, process or transmit personal information, including cardholder information, by firewalls, access control or other appropriate measures.”
This one seems to go beyond explicit PCI rules, as PCI 1.2 says that “network segmentation of, or isolating (segmenting), the cardholder data environment from the remainder of the corporate network is not a PCI DSS requirement. However, it is recommended” and PCI adds that “without adequate network segmentation (sometimes called a “flat network”), the entire network is in scope of the PCI DSS assessment. Network segmentation can be achieved through internal network firewalls, routers with strong access control lists or other technology that restricts access to a particular segment of a network.”
•The TJX deal requires two-factor authentication for remote access to the network, which already is a PCI 1.2 requirement (requirement 8.2, to be specific).
• Shhhhhh. Through the two class-action lawsuits against TJX for its data breach, the chain also seemed to care far more about keeping its glitches secret than almost anything else.
This week’s state attorneys general statement kept the secrecy game going, with the states agreeing to exempt everything related to this case from the eyes of the public. All of the states “shall treat such documents as exempt from disclosure under the relevant public records laws.”
The justification: “These documents may contain sensitive information about the current state of TJX’s security infrastructure and mechanisms, which could be harmful to TJX’s ability to secure data, if disclosed.” If that’s true, why not simply handle it the way the U.S. federal government is supposed to handle Freedom of Information Act requests: release the documents, but black out only those lines that pose a true security threat?
One of the attorneys general involved in the case, Richard Blumenthal of Connecticut, issued a strongly-worded statement about the agreement.
“TJX’s lax security enabled thieves to plunder and pilfer customers’ private financial data. The crooks took untold riches, sensitive information from nearly 100 million credit and debit cards. Card information can be worth cash, but the company treated it like trash. TJX’s sieve-like security was a dream come true for identity thieves and a nightmare for consumers,” Blumenthal said. “”We’re compelling TJX to pay nearly $10 million for its carelessness, (including) almost $400,000 to Connecticut.
The company must now upgrade and up-armor its defenses to properly protect information.” The AGs went out of their way to not dub the dollars a fine. “Of the $9.75 million monetary payment under the settlement, $5.5 million is to be dedicated to data protection and consumer protection efforts by the states and $1.75 million is to reimburse the costs and fees of the investigation,” said a statement issued by the Massachusetts Attorney General’s office, which coordinated the negotiations. “Further, $2.5 million of the settlement will fund a Data Security Trust Fund to be used by the state Attorneys General to advance enforcement efforts and policy development in the field of data security and protecting consumers’ personal information.”
