Fed up with companies failing to protect their confidential information, consumers have demonstrated that they aren’t shy about holding an organization responsible for a data breach accountable. In fact, a recent report from IT services firm Unisys found that 90 percent of people said they would take some action against such an organization.
According to the survey, these responses ran from the mundane to the extremely serious that could drastically affect a company’s bottom line and reputation.
Eighty-seven percent of respondents said they would likely change the passwords on their accounts associated with the company. Another 76 percent said they would close their account, while 53 percent admitted they would file suit against the firm if its data security measures were lacking.
“Given recent highly publicized breaches that have exposed large amounts of sensitive data, the results should be a wake-up call for organizations to take more proactive measures to protect customer data,” Steve Vinsik, the vice president of enterprise security for Unisys, said.
Of course, lawsuits following data breaches are nothing new. Shortly after suffering what was at the time the largest data security incident in history, TJX was faced with multiple litigation cases that involved many of the more than 45 million victims affected by the breach.
In late 2007, TJX reached a settlement with Visa and a bank that processes the company’s payment card transactions worth $40.9 million. Then, in 2009, TJX reached a $525,000 settlement with several other banks that filed suit. In all, the company set aside $118 million during the second quarter of 2007 to deal with costs related to the breach.
In addition to lawsuits, the Unisys report also revealed that consumers wouldn’t be shy about exposing a company that was responsible for a breach. Nearly two-thirds of respondents said they would speak out against a company publicly. And with the popularity of social networks, the report concluded that consumers could communicate such issues more quickly and effectively than ever before.
A recent report from the Experian Data Breach Resolution program and the Ponemon Institute revealed several other damaging effects of data breaches. Perhaps the most serious is the loss of brand value and reputation, the report found.
For a company with revenues of $1.5 billion, the average loss in brand value following a data breach can total between $184 and $330 million, or about 12 to 25 percent of the total, the report found.
Data Security News from SimplySecurity.com by Trend Micro