Data breaches impact customer loyalty

Enterprise Innovation editors
04 Aug 2014
00:00

Nearly two-thirds (65%) of adult consumers in advanced economies would never, or were very unlikely to, do business again with a company that had experienced a data breach where financial data was stolen.

According to new research from SafeNet, a total of 237 data breaches occurred this year between April and June 2014. Data breaches have hit many well-known companies, including AOL, Dominos, eBay, Office, and Spotify, with more than 175 million customer records of personal and financial information compromised globally.

SafeNet polled over 4,500 adults across five of the world’s largest economies – the United States, the United Kingdom, Germany, Japan, and Australia.

Data breaches involving personal identifiable information were deemed to be slightly less harmful to an organization than breaches involving financial data, with just over half (57%) suggesting they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach of this nature.

The research also indicated that only half of adults surveyed feel that companies take the protection and security of customer data seriously enough -- a sentiment that‘s likely to have been influenced by the high volume of data breaches in 2014.

“Data breaches are not just breaches of security,” said Tsion Gonen, chief strategy officer at SafeNet. “They’re also breaches of trust between companies and their customers, and can result in not only negative publicity but lost business, lawsuits, and fines that can threaten the viability of the business.”

Gonen added that for organizations that fail to address their security vulnerabilities, the problem is only going to get worse as stricter regulations governing the reporting of data breaches are introduced across the world, making breaches more visible to the public.

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