What laws regulate the fight against carding? (Overview of legislation, e.g. GDPR, PCI DSS, cybercrime laws)

[Student]

Carding is a type of cybercrime that involves the illegal use of payment card data to perform fraudulent transactions such as purchases, cash withdrawals or transfers. Combating carding requires a comprehensive approach that includes international and national laws, industry standards and technological measures. For educational purposes, I will examine in detail the key laws, standards and mechanisms used to combat carding, focusing on their practical implications, and will also consider examples, issues and additional aspects.

1. International standards and laws​

1.1. GDPR (General Data Protection Regulation, EU)​

General description:

• Came into force in May 2018. Applies to all organisations processing personal data of EU citizens, regardless of their geographical location.
• Personal data includes any information that allows identification of an individual, including payment card data (card number, cardholder name, CVV code, address).

Carding connection:

• Carding often relies on the theft of personal data through phishing, database hacking or skimming. GDPR requires companies to protect such data to prevent it from being used for fraudulent purposes.
• Violating GDPR requirements (such as a card data breach) can result in fines, reputational damage and civil lawsuits.

Key points:

• Article 5: Principles of data processing (lawfulness, data minimization, integrity and confidentiality).
• Article 32: Mandates the implementation of technical and organizational security measures such as encryption, pseudonymization and regular testing of systems.
• Article 33: In the event of a data leak (such as a database of card numbers), the company must notify the regulator within 72 hours.
• Article 83: Fines for violations - up to 20 million euros or 4% of the company's annual turnover.

Practical significance:

• Companies working with payments (online stores, payment gateways) are required to implement security systems such as tokenization (replacing the card number with a unique identifier) and multi-factor authentication.
• Example: In 2019, British Airways was fined £183m for a data breach of 500,000 customers, including card details, demonstrating the GDPR's strictness on cybersecurity.

Educational aspect:

• GDPR emphasizes the importance of proactive data protection. Cybersecurity students should understand that insufficient database protection (such as lack of encryption) leaves companies vulnerable to carders and legally liable for the consequences.

1.2. PCI DSS (Payment Card Industry Data Security Standard)​

General description:

• An international standard developed by the Payment Card Industry Security Standards Council (PCI SSC), founded by Visa, MasterCard, American Express and other payment systems.
• Applies to any organization that stores, processes or transmits payment card data.

Carding connection:

• PCI DSS is designed to prevent theft of card data, which is the main resource for carders. Failure to comply with the standard increases the risk of leaks used in carding.

Key requirements (12 main points):

1. Install and maintain network firewall configurations.
2. Change default passwords and security settings.
3. Protection of stored cardholder data (e.g. encryption).
4. Encryption of data transmission over open networks.
5. Use and regularly update antivirus software.
6. Developing and maintaining secure systems and applications.
7. Restricting access to card data on a "need to know" basis.
8. Authentication of access to systems.
9. Physical restriction of access to systems storing card data.
10. Monitoring and recording of all data transactions.
11. Regular testing of security systems and processes.
12. Maintaining information security policy.

Practical significance:

• PCI DSS compliant companies minimize the risk of data leaks. For example, tokenization (replacing the card number with a token) makes the data useless to carders even in the event of a leak.
• Example: In 2013, Target (an American retail chain) suffered a 40 million card data breach due to non-compliance with PCI DSS, resulting in fines and reputational damage.

Educational aspect:

• PCI DSS demonstrates the importance of security standardization in the financial industry. Students should understand that the standard not only protects data, but also sets a framework for auditing and certifying companies that work with payments.

1.3. Council of Europe Convention on Cybercrime (Budapest Convention, 2001)​

General description:

• The first international agreement aimed at combating cybercrime. Signed by more than 60 countries, including the EU, the US, Canada, Japan, etc.
• Russia signed the convention in 2001 but did not ratify it, and in 2022 it withdrew from the Council of Europe.

Carding connection:

• Carding is classified as a cybercrime involving illegal access, fraud and the use of malware.
• The Convention promotes international cooperation in the investigation of carding, which often occurs across borders.

Key points:

• Criminalization:
  • Illegal access to computer systems (e.g. hacking into card databases).
  • Data interception (e.g. via skimmers or phishing).
  • Computer fraud (using stolen cards to make purchases).
  • Creation and distribution of malware.
• International cooperation:
  • Exchange of information between countries for investigation.
  • Extradition of criminals if necessary.
• Data retention: Law enforcement may require providers to retain data for investigations.

Practical significance:

• The Convention helps coordinate actions against darknet carding forums such as AlphaBay or Hansa, which were shut down as a result of Interpol and Europol operations.
• Example: In 2020, Europol's Operation Carding Action resulted in the arrest of 12 suspected carders in 7 countries, made possible by international cooperation.

Educational aspect:

• The Convention highlights the complexity of cross-border cybercrime. Students should learn how globalization affects cybercrime and why international cooperation is critical.

2. International and regional initiatives​

2.1. USA​

• Gramm-Leach-Bliley Act (GLBA):
  • Regulates the protection of financial information in the United States. Banks and financial institutions are required to protect customer data, including card numbers.
  • Application: A data leak at a bank can lead to fines and lawsuits from customers.
• Computer Fraud and Abuse Act (CFAA):
  • Criminalizes unauthorized access to systems, including hacking to obtain card data.
  • Example: In 2014, a hacker who stole Home Depot customer card data was convicted under the CFAA.
• California Consumer Privacy Act (CCPA):
  • Similar to the GDPR for California residents. Gives consumers the right to know what data is being collected and to request that it be deleted.
  • Application: Companies that leak card data could face class action lawsuits.

Educational aspect:

• The US demonstrates how legislation is adapting to data protection in a developed financial system. Students can compare the US and EU approaches to regulation.

2.2. PSD2 Directive (EU)​

General description:

• The second Payment Services Directive (PSD 2) came into force in 2018.

Carding connection:

• Introduces a Strong Customer Authentication (SCA) requirement for all online payments, reducing the likelihood of stolen cards being successfully used.

Key points:

• Mandatory two-factor authentication (e.g. password + biometrics or code from SMS).
• Regulating open banking APIs for secure data exchange.
• Banks' liability for unauthorized transactions.

Practical significance:

• SCA makes carding more difficult because it is not enough for a carder to have just the card data – he needs access to an additional authentication factor.
• Example: In 2020, the implementation of PSD2 in the EU resulted in a 30% reduction in fraudulent transactions in some countries.

Educational aspect:

• PSD2 demonstrates how legislation drives the adoption of new technologies. Students can explore how authentication standards impact user experience and security.

3. Practical measures and technologies​

3.1. Antifraud systems​

• Banks and payment systems use machine learning algorithms to analyze transactions in real time.
• Example: Visa and MasterCard systems (e.g. Visa Advanced Authorization) analyze hundreds of parameters (location, amount, frequency of transactions) to identify suspicious transactions.

3.2. Technological standards​

• Tokenization: Replacing the card number with a unique token that is useless to carders outside of a specific system.
• EMV Chips: Cards with chips are harder to counterfeit than magnetic stripes.
• 3D-Secure: An additional layer of authentication for online payments.

3.3. Cooperation with law enforcement agencies​

• Interpol and Europol are conducting operations against carding networks. For example, Operation Global Airport Action in 2023 led to the arrest of 70 suspected carders.
• In Russia, the FSB and the Ministry of Internal Affairs cooperate with international agencies despite political restrictions.

Educational aspect:

• Students should understand how technology and law enforcement work together to combat carding. Studying anti-fraud systems helps them understand the role of AI in cybersecurity.

4. Problems and challenges​

1. Cross-border:
   • Carders often operate from countries with lax laws, making them difficult to prosecute.
   • Solution: Strengthen international cooperation through mechanisms such as the Budapest Convention.
2. Darknet:
   • Darknet sites (for example, for selling "dumped" cards) use anonymous networks (Tor) and cryptocurrencies, which makes tracking difficult.
   • Solution: Development of blockchain analysis and cyber intelligence technologies.
3. Legislation becoming obsolete:
   • Laws have not always kept up with new carding methods, such as the use of cryptocurrencies or AI for phishing.
   • Solution: Regularly update laws and standards.
4. Human factor:
   • Users often become victims of phishing due to low digital literacy.
   • Solution: Educational campaigns and the introduction of simpler, more secure authentication technologies.

Educational aspect:

• Students should be aware that carding is not only a technical problem, but also a social one. Studying the challenges helps to understand the need for an interdisciplinary approach (technology, law, psychology).

5. Conclusion​

The fight against carding rests on three pillars:

1. Legislation: GDPR, PCI DSS, Budapest Convention and national laws provide a legal basis for data protection and prosecution of criminals.
2. Technologies: Tokenization, EMV chips, 3D-Secure and anti-fraud systems reduce the risks of carding.
3. International Cooperation: The cross-border nature of carding requires coordination between countries and law enforcement agencies.

For educational purposes, it is important to emphasize that combating carding requires a comprehensive approach that includes legal, technical, and social measures. Students studying cybersecurity should understand the relationship between legislation, technology, and user behavior. If you need a breakdown of a specific aspect (e.g. a case, technology, or law), write to me and I will go into more detail!

 

[chushpan]

Here is a comprehensive and detailed expansion on the laws and regulations that form the legal and operational framework for combating carding.

The Multi-Layered Legal and Regulatory Framework Against Carding​

Combating carding is a complex endeavor that requires a coordinated response across the entire payment ecosystem. No single law exists to eradicate it; instead, a multi-faceted framework targets each stage of the carding lifecycle: prevention, detection, prosecution, and liability management.

This framework can be broken down into four distinct but overlapping layers:

1. The Preventative Shield: Data Security & Privacy Laws (e.g., GDPR)
2. The Operational Playbook: Industry Security Standards (e.g., PCI DSS)
3. The Legal Backstop: Cybercrime & Criminal Laws (e.g., CFAA, Computer Misuse Act)
4. The Consumer & Market Regulator: Financial Services & Consumer Protection Laws (e.g., PSD2, Regulation E)

Layer 1: The Preventative Shield - Data Security & Privacy Laws​

These laws establish a broad, principle-based duty of care for organizations that handle personal data, which includes payment card information. Their primary role is to prevent the data breach that fuels the carding economy.

General Data Protection Regulation (GDPR) - European Union​

The GDPR is the most influential data privacy law globally, setting a high bar for security and creating severe penalties for failure.

• Key Principles and Articles:
  • Article 5: Principles relating to processing of personal data. This includes "integrity and confidentiality," meaning data must be processed in a manner that ensures appropriate security, including protection against unauthorized or unlawful processing and against accidental loss, destruction, or damage.
  • Article 25: Data protection by design and by default. This requires organizations to implement appropriate technical and organizational measures (e.g., pseudonymization) to integrate data protection into their processing activities from the very beginning. This directly counters poor system design that carders exploit.
  • Article 32: Security of processing. This is the core security mandate. It requires controllers and processors to implement a level of security "appropriate to the risk." The regulation explicitly suggests:
    • The pseudonymization and encryption of personal data.
    • The ability to ensure the ongoing confidentiality, integrity, availability, and resilience of processing systems.
    • A process for regularly testing, assessing, and evaluating the effectiveness of technical and organizational measures.
  • Articles 33 & 34: Breach notification. Mandates that a personal data breach (which includes a cache of stolen card data) must be reported to the supervisory authority within 72 hours of discovery. If the breach is likely to result in a high risk to individuals' rights and freedoms, the individuals must be notified without undue delay. This forces transparency and rapid response.
• Enforcement & Impact: Non-compliance can lead to administrative fines of up to €20 million or 4% of the company's total global annual turnover, whichever is higher. This creates a powerful financial incentive for companies to invest in robust cybersecurity, directly impacting the vulnerability of systems that carders target.

Other Key Data Protection Laws:

• California Consumer Privacy Act (CCPA) / California Privacy Rights Act (CPRA): Similar to GDPR, these state laws impose security requirements and provide a private right of action for consumers in the event of a data breach due to a business's failure to implement "reasonable security procedures."
• UK Data Protection Act 2018: Incorporates GDPR into UK law post-Brexit.
• Brazil's LGPD (Lei Geral de Proteção de Dados): Heavily inspired by GDPR, with similar provisions and penalties.

Layer 2: The Operational Playbook - Industry Security Standards​

While not "law" in the statutory sense, these standards are contractually enforced and form the specific, technical rulebook for anyone handling payment card data.

Payment Card Industry Data Security Standard (PCI DSS)​

Maintained by the PCI Security Standards Council (PCI SSC), founded by major card brands (Visa, Mastercard, Amex, etc.), PCI DSS is the most direct and detailed defense against carding.

• The 12 Core Requirements (Grouped into 6 Goals):
  1. Build and Maintain a Secure Network and Systems
     • Req 1: Install and maintain a firewall configuration to protect cardholder data.
     • Req 2: Do not use vendor-supplied defaults for system passwords and other security parameters.
  2. Protect Cardholder Data
     • Req 3: Protect stored cardholder data. This mandates encryption, hashing, masking, and truncation. The fundamental rule is: Do not store sensitive authentication data (e.g., full track data, CAV2/CVC2/CVV2/CID, PINs) after authorization.
     • Req 4: Encrypt transmission of cardholder data across open, public networks. This prevents "sniffing" attacks.
  3. Maintain a Vulnerability Management Program
     • Req 5: Protect all systems against malware and regularly update anti-virus software.
     • Req 6: Develop and maintain secure systems and applications.
  4. Implement Strong Access Control Measures
     • Req 7: Restrict access to cardholder data by business "need to know."
     • Req 8: Identify and authenticate access to system components. This includes using unique IDs, multi-factor authentication, and not using group/shared passwords.
     • Req 9: Restrict physical access to cardholder data.
  5. Regularly Monitor and Test Networks
     • Req 10: Track and monitor all access to network resources and cardholder data. This is crucial for detection and forensic analysis after a breach.
     • Req 11: Regularly test security systems and processes (e.g., vulnerability scans, penetration tests).
  6. Maintain an Information Security Policy
     • Req 12: Maintain a policy that addresses information security for all personnel.
• Enforcement & Impact: Compliance is validated annually (or quarterly for some requirements). Failure to comply is not a "crime," but it results in severe consequences from the payment card brands: significant monthly fines, increased transaction fees, and ultimately, the revocation of the ability to process card payments—a death sentence for most modern businesses.

Layer 3: The Legal Backstop - Cybercrime & Criminal Laws​

When prevention fails, these laws provide the tools for law enforcement to investigate, arrest, and prosecute the carders themselves.

Computer Fraud and Abuse Act (CFAA) - United States​

• Scope: The primary federal anti-hacking law.
• Relevance: It criminalizes:
  • Intentionally accessing a computer without authorization to obtain information (e.g., hacking a merchant to steal a card database).
  • Knowingly and with intent to defraud, trafficking in passwords or similar information through which a computer can be accessed.
  • Transmitting a program, code, or command that intentionally causes damage to a protected computer (e.g., deploying malware).

Computer Misuse Act 1990 - United Kingdom​

• Scope: The UK's main legislation against cybercrime.
• Relevance: It criminalizes:
  • Unauthorized access to computer material (the basic hacking offense).
  • Unauthorized access with intent to commit or facilitate further offenses (e.g., accessing a system to steal card data for fraud).
  • Unauthorized acts with intent to impair, or with recklessness as to impairing, the operation of a computer (e.g., launching a DDoS attack).

Council of Europe Convention on Cybercrime (Budapest Convention)​

• Scope: The first international treaty on crimes committed via the internet. It is crucial for cross-border cooperation as carding is a global crime.
• Relevance: It requires signatory countries to adopt laws against:
  • Illegal access, interception, and data interference.
  • System interference.
  • Computer-related forgery and fraud.
  • It also establishes procedures for extradition and mutual legal assistance.

Ancillary Criminal Laws​

Carding operations also violate numerous traditional statutes:

• Identity Theft/Theft Acts: Using stolen card information is identity theft and fraud.
• Conspiracy & Racketeering (RICO) Laws: Used to dismantle entire organized carding rings.
• Money Laundering Laws: The process of "cashing out" – using stolen cards to buy high-value goods and resell them for "clean" money – is a classic money laundering operation.

Layer 4: The Consumer & Market Regulator - Financial Services & Consumer Protection Laws​

These laws manage the aftermath of carding, protect consumers, and create economic incentives for the industry to improve security.

Payment Services Directive 2 (PSD2) - European Union​

• Key Feature: Strong Customer Authentication (SCA)
• Relevance: SCA requires electronic payments to be authenticated using at least two of these three independent elements:
  1. Knowledge (something only the user knows, e.g., a password or PIN).
  2. Possession (something only the user possesses, e.g., a phone or token).
  3. Inherence (something the user is, e.g., a fingerprint or facial recognition).
• Impact: This has been a massive blow to carders. Even if they possess a stolen card number and CVV, they often cannot complete the transaction without the second factor (e.g., a one-time password sent to the legitimate cardholder's phone).

Regulation E (Electronic Fund Transfer Act) & Regulation Z (Truth in Lending / Fair Credit Billing Act) - United States​

• Purpose: These regulations limit consumer liability in cases of unauthorized transactions.
  • Debit Cards (Regulation E): Liability is limited to $50 if reported within 2 days, and up to $500 if reported within 60 days. After 60 days, the consumer could be liable for all losses.
  • Credit Cards (Regulation Z): Liability for unauthorized charges is capped at $50.
• Impact: This shifts the financial burden of carding fraud from the consumer to the financial institutions and merchants. This, in turn, creates a powerful market force where banks have a vested interest in detecting fraud and merchants are pressured to be PCI compliant to avoid chargebacks.

Synthesis: How the Layers Interact in Practice​

Imagine a scenario where a hacker breaches an online retailer:

1. The Breach: The hacker exploits a vulnerability. The retailer may be sued for failing to meet the security standards mandated by the GDPR (Layer 1) and will be fined by the card brands for violating PCI DSS Requirement 6 (secure applications) (Layer 2).
2. The Theft: The hacker exfiltrates a database of card numbers. Law enforcement investigates this as a crime under the CFAA (Layer 3).
3. The Carding: The hacker sells the database on a dark web forum. Buyers use the cards online. The act of trafficking and using the cards is fraud, prosecuted under general criminal statutes (Layer 3).
4. The Transaction: When a carder tries to use a stolen card number at a European merchant, the transaction is blocked by PSD2's SCA requirement (Layer 4). In the U.S., the transaction might go through.
5. The Aftermath: The legitimate cardholder discovers the fraud. Their bank reverses the charges under Regulation Z (Layer 4), and the merchant bears the loss (a chargeback), reinforcing the need for them to have better fraud detection tools and maintain PCI DSS (Layer 2) compliance.

Conclusion:
The fight against carding is a dynamic and layered defense. PCI DSS provides the essential, granular technical controls. GDPR and similar laws create a overarching legal duty for security and breach transparency. Cybercrime laws provide the tools for justice and deterrence. Finally, financial regulations like PSD2 and Regulation E protect the end-user and create a market-driven ecosystem where security is not just a technical goal but a financial imperative. A comprehensive strategy requires understanding and strengthening all four layers.