Visa Sued for Fines Stemming from Genesco Data Breach
A specialty sports-apparel retailer filed a lawsuit against Visa for a $13.3 million fine following a security breach, saying that the Payment Card Industry's fines for data breaches are arbitrary.Specialty sports-apparel retailer Genesco filed a lawsuit on March 7 against Visa seeking to recover nearly $13.3 million in fines that the credit-card company levied following a breach of the retailer's systems that may have resulted in fraudulent transactions. The civil case could be the most significant test to date of the Payment Card Industry's Data Security Standards (PCI DSS), which forces merchants that handle credit-card data to follow certain security practices or face fines from the credit-card industry, said Torsten George, vice president for risk-management firm Agiliance. The lawsuit argues that Visa is not allowed to require other companies to pay penalties citing Visa's own operating regulations and California law. The lawsuit also alleges that Genesco was never out of compliance with PCI DSS regulations, and so it should not have been fined. "This is one of the first cases making it into the public where the merchant is saying, 'I'm sick and tired of being put into a position where I basically have no choices and I'm sick and tired of being a slave of the system,'" he told eWEEK. "Merchants want to try to get more objective treatment from the credit-card companies." The lawsuit, first reported by Wired.com, is the first time a merchant has sued a credit-card company for fines levied under PCI DSS. The legal action stems from a 2010 compromise at Genesco, about which the company provided only limited details in the court document. The attackers installed a packet sniffer on the company's network that siphoned off card data sent from Genesco to its banks. The attackers apparently did not target the company's stored card data.
While companies complain about the cost of complying with PCI DSS, the specifications do result in better security, especially if companies treat them as guidelines to be exceeded, rather than onerous tasks to check off. In a 2010 analysis, Verizon found the companies who suffered a breach were far less likely to have complied with PCI DSS. Yet, others have argued that the rules do not result in better security, because companies that should have been PCI-compliant but were not have still suffered notable breaches.