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!