Feeds

Consumers punish firms over data security breaches

Leaked data leads to lost business

The essential guide to IT transformation

Consumer data security breaches are leading to customer revolt and an average cost per incident of $14m, according to a brace of surveys out this week.

One in five US consumers quizzed by Ponemon Institute said they immediately terminated their accounts with vendors that lost their information. An additional 40 per cent polled by the organisation's National Survey on Data Security Breach Notification considered taking their business elsewhere after receiving notifications of information mishandling. The survey polled 9,000 consumers, 12 per cent of whom had received notices of information security breaches.

A parallel study conducted by Ponemon estimates an average cost of $14m per security breach incident, with costs ranging as high as $50m. The survey, Lost Customer Information: What Does a Data Breach Cost Companies?, is among the first to look at data from actual cases of lost customer data. Covering 14 separate incidents, the research encompasses 1.4m compromised data records and an estimated total of $200m in resulting losses. Total cost estimates include the actual cost of internal investigations, outside legal defense fees, notification and call center costs, PR and investor relations efforts, discounted services offered, lost employee productivity, and the effect of lost customers.

Both studies show customers are punishing companies that lose their confidential and private information. However the second corporate study suggests a lower number of consumers take their business elsewhere following consumer data security breaches. This study suggests an average loss of 2.5 per cent of all customers, ranging as high as 11 per cent, as compared to 20 per cent defection after security screw-ups suggested by the consumer survey.

Corporations no longer have the option of hoping that US customers will not find out about mishandled information. Currently, 21 US states have laws requiring that customers or employees be notified when protected personal information has been breached. A series of high-profile consumer data security breaches involving US firms including data mining firm ChoicePoint, payment processing firm CardSystems Solutions and others have pushed the issue up the political agenda.

Security firms such as PGP Corporation are cited by Ponemon as emphasising the need for wider use of encryption technologies in safeguarding customer data. Ponemon's studies can be downloaded from PGP's website here (registration required). ®

5 things you didn’t know about cloud backup

More from The Register

next story
Goog says patch⁵⁰ your Chrome
64-bit browser loads cat vids FIFTEEN PERCENT faster!
Chinese hackers spied on investigators of Flight MH370 - report
Classified data on flight's disappearance pinched
KER-CHING! CryptoWall ransomware scam rakes in $1 MEEELLION
Anatomy of the net's most destructive ransomware threat
NIST to sysadmins: clean up your SSH mess
Too many keys, too badly managed
Scratched PC-dispatch patch patched, hatched in batch rematch
Windows security update fixed after triggering blue screens (and screams) of death
Researchers camouflage haxxor traps with fake application traffic
Honeypots sweetened to resemble actual workloads, complete with 'secure' logins
prev story

Whitepapers

Gartner critical capabilities for enterprise endpoint backup
Learn why inSync received the highest overall rating from Druva and is the top choice for the mobile workforce.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.