Monday, August 14, 2006

Consumer Trends Portend a Massive Backlash against Businesses that Fail to Implement Sound Data Security Measures

The threat of identity theft has become a given in most consumers’ minds. Merely going online, let alone making a simple purchase while on the Web, has become akin to walking solo down an inner city back alley after midnight. And yet another laptop stolen from the Veterans Affairs Department, not to mention the latest security breakdown at the Department of Transportation, only serve to chip away even further at consumer confidence. The potential costs to consumers and industry alike have reached enormous proportions. Consumers who have yet to take notice soon will—and probably the hard way.

New research last week provided insight into consumers’ attitudes about data security breaches and into the demographics of those most susceptible to identity fraud and theft. Other findings placed the annual cost to victims of cybercrime in the billions of dollars for U.S. and British citizens. And while the data mostly spell trouble for industry, some of the results suggest companies that understand the importance of security could convert the bad news to opportunity.

Research released in a flurry from various organizations last week underscored the daunting costs of cybercrime and the fragile state of consumer confidence in data security:

=>A survey of 2,200-plus consumers, conducted by Princeton, NJ’s Opinion Research Group, found more than half of respondents reporting a rise in their concerns over data security. Released on Aug. 7, the results also revealed that this heightened awareness caused 40 percent of those surveyed to halt a transaction online, over the phone, or in person. Furthermore, no single industry, brand, or company stood out when researchers asked respondents to name a most trusted.

=>On Aug. 8, the BBC News reported the results of research conducted by Britain-based market research firm YouGov and commissioned by Npower, an energy firm. One in every 10 of the 2,200 people polled believed they had fallen prey at some point to identity fraudsters. According to the findings, people under 30 years old, less prone to protect information such as the PIN numbers to their ATM cards, may be more susceptible to identity thieves.

=>As reported in the Aug. 6 edition of the Sunday Mirror, the British government has estimated the annual cost of cybercrime there to be in excess of £2 billion. On Aug. 8, an article in California’s Central Valley Business Times shared results from Consumer Reports’ “State of the Net Survey,” which found that U.S. consumers lost more than $8 billion over the past two years to cybercrime.

The these various findings, while worrisome, also present opportunities. Security consciousness has become a necessity for industry, and anyone who markets this consciousness ahead of the curve will not only retain existing customers; these sage companies will also woo jaded consumers from unconscious competitors. But only believable, strong countermeasures properly communicated to the public will work. After all, how can any company expect to conduct business, especially e-commerce, in an environment fraught with so many fears about security?


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