The latest exposure of millions of credit and debit card numbers by Hannaford Bros., a grocery chain with 271 locations in New England and Florida, raises new questions about the value of the credit card industry's controversial security rules, known as PCI. The Payment Card Industry Data Security Standard was put in place by major card brands, including Visa and MasterCard, to ensure that retailers take sufficient steps to protect customers' financial data. More than 3,600 U.S. retailers comply with--or are working to come into compliance with--the PCI program.

But retailers and security vendors know that PCI compliance is a slippery concept in terms of determining who is, and is not, up to par. And the Hannaford breach--in which 4.2 million credit and debit card numbers were exposed even as the company's Web site states that it "has been certified as compliant" with PCI--demonstrates to the rest of the world just how fluid this concept really is.

Bottom line, PCI compliance is mutable. While a compliance certification is valid for one year, a retailer may perform actions, or fail to perform actions, that take it out of compliance. On the one hand, this is sensible. PCI rules are like the dietary guidelines a doctor issues to a patient. It's not the physician's fault if someone with through-the-roof cholesterol ignores advice and eats like Homer Simpson.

And on the other hand, this mutability of compliance is where things get slippery. At least one third-party organization will be brought in to review Hannaford's PCI assessment, as well as its security and operational practices at the time of the breach. As discussed in "PCI And The Circle Of Blame"), the PCI standard is vague enough that it won't be hard to find cause to declare the retailer noncompliant. This ability to strip a retailer of its "compliant" designation works in favor of the card brands. If they can subsequently reclassify every PCI-compliant retailer that gets breached as noncompliant, they can point to PCI as a success because no "compliant" vendors get breached.

A retailer's compliance status matters: The penalties for noncompliance are significant, and the card brands can fine the retailer while also raising the transaction fees levied for each credit or debit card transaction. A finding of noncompliance also will be potent ammunition for inevitable lawsuits. The big loser: consumers.

THE ASSESSOR FACTOR

The Hannaford case in particular may have far-reaching implications. At present, there are 326 retailers in the United States that have to undergo assessments by a third party to determine if they're PCI-compliant. As of press time, Hannaford hadn't responded to requests to determine if it had a third-party assessment. But if it had, should the assessor share any of the blame?

"I think, to a person, their philosophy is they do not carry liability for a breach," says David Taylor, president of the PCI Security Vendor Alliance, which provides products and services for organizations that are required to comply with the standard. Taylor says assessors argue that because their assessments happen at only one point in time, they shouldn't bear responsibility for a breach if the retailer fails to maintain adequate controls.

This question is further complicated by the timeline of the Hannaford breach. According to The Associated Press, the attack commenced on Dec. 7 but wasn't discovered until Feb. 27 and wasn't contained until March 10. At the same time, a separate report quotes a Hannaford spokeswoman as saying the retailer was certified as compliant in February--the same timeframe in which the breach was ongoing. If a third-party assessor certified the retailer as compliant during an attack, surely it must share some of the responsibility.

The likely outcome is that liability questions will be resolved at some future time, by lawyers and courts.