Data Breaches Affect Customer Loyalty

By Eileen McCooey
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    Data Breaches Affect Customer Loyalty

    Data Breaches Affect Customer Loyalty

    Consumers are aware of online security risks and hold businesses responsible for protecting their personal data. Companies must step up or risk losing customers.

Online security is full of holes, according to a recent survey of 9,000 consumers in the United States and 10 other countries. Most consumers who are active online—nearly six out of 10— believe they will be a victim of a data breach at some point. In fact, many have already been affected: 21 percent have experienced fraudulent use of their financial information, and 14 percent have experienced identity theft. The "2016 Data Breaches and Customer Loyalty report," conducted by digital security firm Gemalto, shows that survey participants believe most of the responsibility for safeguarding their data lies with the companies involved, but many consumers believe companies don't take that charge seriously. Further, the majority would stop using a business that experienced a breach in which their financial and other sensitive information was stolen, and many would take legal action against the company. Weak security measures could be contributing to the lack of confidence. Many organizations rely solely on passwords to protect user data; far fewer use more stringent measures, such as two-factor authentication and data encryption. "Implementing such advanced protocols and educating consumers about them should show consumers that businesses take the protection of their personal data very seriously," said Jason Hart, CTO, Data Protection at Gemalto. "Failure to do so makes a company vulnerable to repercussions that can potentially ruin a reputation and the company itself." However, the study clearly shows that consumers could do more to help themselves: Though they are conscious of the risk that using online accounts can pose to their personal data, many leave themselves more vulnerable by using the same passwords across multiple accounts.

This article was originally published on 2017-02-01
Eileen McCooey, a New York-based consultant and Baseline contributor, has extensive experience covering a wide range of business and consumer topics, including digital technologies and consumer electronics of all kinds.
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