Retailers flag PCI anti-trust concerns with FTC

Retailers flag PCI anti-trust concerns with FTC

US retailers are calling on the Federal Trade Commission to investigate the activities of the Payment Card Industry Security Standards Council ahead of a possible move by the watchdog to adopt the Council's PCI DSS protocols as an example of best industry practice.

The National Retail Federation has flagged anti-trust concerns with the FTC, slating the PCI for allegedly enforcing standards that serve to cement the power of the major card schemes.

NRF’s allegations come as the FTC is conducting an inquiry into how third-party companies perform assessments of PCI compliance by retailers and other businesses that accept credit cards. NRF understands that the FTC is also considering PCI requirements as an example of industry best practices.

“We urge the FTC not to rely on PCI DSS for any purpose, particularly not as an example of industry best practices nor as a benchmark in determining what may constitute responsible data security standards in the payment system or any other sector,” NRF SVP and general counsel Mallory Duncan said in a letter to FTC chairwoman Edith Ramirez and other commission members.

The letter continues: “We believe you will conclude PCI itself is an inappropriate exercise of market power by the dominant US payment card networks and PCI should not continue setting data security standards through its current processes.”

The PCI council was formed in 2006 by the major credit card companies - Visa, MasterCard, American Express, Discover and JCB - and is governed by an executive committee made up of representatives of only those five companies.

In a 19-page white paper submitted to the FTC, NRF says the card companies use their market power to “unfairly leverage their brands and proprietary technology through webs of closely controlled interdependent bodies and compliance regimes” including the council. While portrayed as voluntary, the Payment Card Industry Data Security Standard requirements set by the council are “forced upon businesses that cannot refuse to accept credit and debit cards.”

The council’s practices “raise antitrust concerns” for a number of reasons, including “general antitrust dangers when competitors collaborate on setting market standards” and “more targeted concerns insofar as they allow the networks to leverage their proprietary technology,” the paper contends.

Among other concerns, PCI requirements act as “as an anticompetitive barrier to innovation” because they “exhaust” funds and other resources retailers have available for data security, the paper alleges.

Comments: (2)

A Finextra member
A Finextra member 03 June, 2016, 16:50Be the first to give this comment the thumbs up 0 likes

I couldn't agree more.

Chris Brown
Chris Brown - Trusek - Amersham 08 June, 2016, 16:01Be the first to give this comment the thumbs up 0 likes

This is great news. The PCI council is answerable to no one on whom they impose these standards and each iteration bring in more and more draconian rules for which they bear none of the costs. The merchants and service providers have no alternative but to comply or fold. It makes no difference whether an individual rule has any meaningful benefit in one particular case as the "one size fits all" approach is taken for the ease of the council and eventually the merchants and the card holders get to pay.

Thanks, Chris