The Risks and Consequences of the PCI DSS Non-Compliance – A Detailed Guide

PCI DSS Non-Compliance impacting the business in various ways and leads to a variety of consequences. PCI DSS is a set of information security standards for corporations that help safeguard payment card data from data loss, theft, or other accidents. It helps ensure trustworthy transactions by your merchants or their customers.

PCI DSS is not just compliance, but also a good business practice. That’s why, if your organization doesn’t comply with this industry-standard, it takes crucial risks. Then, it may face strict consequences if the payment card data Mets any attack or accident, say if the data is breached or stolen by an attacker.

What is Non-compliance?

Non Compliance is a practice of denying or failure to comply with regulation or rule that leads to various consequences and probable risks especially payment industry that associated with PCI DSS. It will help you to understand the importance of complying with PCI DSS. But first and foremost, let’s get to know PCI DSS.

What is PCI DSS?

PCI DSS — Payment Card Industry Data Security Standard — is a set of security standards for businesses that process and store credit card data. PCI DSS compliance helps them secure the sensitive data from multiple types of threats including cyberattacks and insider thefts. It helps grow customer trust in the payment card industry — especially your organization and its merchants.

PCI DSS was first released in December 2014 as a combined effort from five biggest card companies: American Express, Discover, JCB, MasterCard, and VISA. It was developed to enhance cardholder data security by providing a set of operational and technical requirements compiled to safeguard card data.

The compliance applies to all entities in the payment card industry including card issuers, merchants, and service providers along with the entities that process, store, or transmit card or cardholder data or sensitive authentication data. It applies to third-party companies who handle outsourcing work too.

PCI DSS is very significant for any organization because “the breach or theft of cardholder data affects the entire payment card ecosystem. Customers suddenly lose trust in merchants or financial institutions, their credit can be negatively affected — there is enormous personal fallout. Merchants and financial institutions lose credibility (and in turn, business), they are also subject to numerous financial liabilities,” according to PCI Security Standards Council.

PCI DSS helps you protect your customers’ data. If your business is compliant with PCI DSS, it shows that you’re doing the very best to keep your clients’ or their customers’ data safe and secure while it’s processed, stored, or transmitted within your organization. If your business is not compliant, it shows that you are apathetic and aren’t doing enough for protecting card and cardholder data.

Also, “the security benefits associated with maintaining PCI compliance are vital to the long-term success of all merchants who process card payments. This includes continual identification of threats and vulnerabilities that could potentially impact the organization. Most organizations never fully recover from data breaches because the loss is greater than the data itself,” said QSR Magazine.

Risks and Consequences of Non-Compliance

If you’re a business that doesn’t process a lot of transactions, you may wonder about this compliance — why to comply with PCI DSS? Well, first of all, you must read the importance of PCI DSS; it’s provided above in this write-up.

Then, it’s not hard to get compliant with PCI DSS, especially if you’re a small merchant or organization. Small merchants — who process less than 20,000 credit card transactions a year — known as “level 4 merchants” have the lowest compliance requirements. However, “60 percent of small businesses experienced a cyber breach” and “71 percent of hackers attack businesses with under 100 employees,” according to an infographic by PCI Security Standards Council.

It further reported that “a survey of 1,015 small and medium businesses found 60% of those breached close in six months.” That means, if you’re a small business, it’s easy to get compliant with PCI DSS, and it’s also easy to get compromised too. So, it brings us to the question: what do you want to choose from the two?

I bet you’ll opt for compliance, right? If you’re going to choose the other, let’s discuss the risks and consequences associated with the non-compliance of PCI DSS. It will help you understand its importance and take the right decision.

Monetary Penalties

Your business can be charged with monetary fines from the payment processors or credit card companies due to the non-compliance of PCI DSS. The penalties called “non-compliance fees” range from $5,000 to $100,000 per month.

Moreover, if there is a data breach or leak leading to fraudulent purchases on your customers’ credit cards, your organization could be responsible for bank reversal charges, which may be significant per the number of leaked records.

Legal Consequences

The customers harmed by the data breach may opt for legal action against your business using lawsuits — they are mostly expensive. Then, you may get lawsuits from credit card companies as well, or the government, in the worst cases.

For example, Target Corp. — a retail giant — experienced a massive data breach in late 2013. It cost the company $202 million for handling the breach, which included $18.5 million settlement with 47 state attorneys general, per Fortune.

Damaged Reputation

In addition to the unhappy customers shouting their voices in online forums and social media platforms, the press may also pick and spread the news. Overall, a data breach or leak generally ends up with a lot of negative press, which is one of the worst things that may happen to an organization. Don’t you agree?

Loss of Customers

Do you think a customer can trust your organization if it suffered a data breach? A lot of customers won’t trust you again. Then, card processors or credit card companies may also restrict your organization from handling card data.

Forensic Audits

Though businesses are usually monitored by credit card companies and the PCI Security Standards Council, the Federal Trade Commission monitors the larger organizations who handle a large amount of payment card transactions.

The FTC can audit your business if it’s found not complying with PCI DSS, and an audit by the FTC is never good news. After all, you don’t want a government body auditing your organization and peeking over your shoulder, right?

Read: 10 Important Components of PCI Compliance Checklist