NEW! 2014 Aftermath of a Mega Data Breach Study
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Identity Theft Protection: A Tale of Two Options
When it comes to data breach incidents, an interesting dichotomy seems to exist. A newly released study finds that consumers believe they should receive identity theft protection or credit monitoring following a breach. Yet, the majority of breached organizations do not offer these services.
The consumer sentiment study, conducted by the Ponemon Institute, finds that 63 percent of the respondents believe they should be given identity theft protection, 58 percent say they should receive credit-monitoring services and 67 percent believe they’re entitled to compensation such as cash, products or services from the breached entity.1
Yet only 25 percent of the breached organizations polled offered identity theft protection, credit monitoring or fraud resolution services in their notification letters or emails.
The reasoning behind this could be pragmatic. For instance, if a firm has a breach that affects more than 100 million consumers, the cost of providing identity protection with credit monitoring may be so expensive that the company simply cannot afford it. Another reason could be the perception that consumers won’t activate their identity protection, so why bother to provide it?
But if an organization can afford it, research and experts say that identity protection with credit monitoring is a good investment to protect customers.
“Credit monitoring can assist individuals in the early detection of instances of identity theft,” according to the U.S. Department of Homeland Security (DHS). Although credit monitoring cannot guarantee that identity theft will not occur, it does allow individuals to take steps to minimize the harm, the DHS added.2
Adding to this, individuals affected in a breach who receive free credit monitoring are six times less likely to file litigation against the breached company.3
The Ponemon study also finds that consumers become much more afraid of being victims of identity theft after their personal information is compromised in a data breach. For example, 45 percent of the respondents said they were “extremely or very concerned” about becoming an identity theft victim after a data breach, compared with 24 percent before a breach.4
Those concerns are justified, according to Javelin Strategy & Research, which did a study indicating that nearly one in three data breach victims in 2013 became a victim of fraud the same year.5
The Ponemon study also finds:
- More than 75 percent of the respondents believe stress is the worst part of being impacted by a breach, followed by the time spent to resolve the problems it caused.6
- Data breaches are part of the Top 3 reasons for giving a company a bad reputation. The other two are poor customer service and environmental incidents.7
If this research is any indication, then providing identity protection with credit monitoring, along with superb customer service can go a long way in calming the fears of your consumers and preserving your reputation following a breach. In the end, it’s better to invest in your consumers upfront, than to try to replace them after they’re gone.
For the complete Ponemon consumer sentiment study, click here
1 The Aftermath of a Mega Data Breach: Consumer Sentiment, Ponemon Institute, April 2014
2 U.S. Department of Homeland Security Privacy Incident Handling Guidance, January 26, 2012
3 Empirical Analysis of Data Breach Litigation, Carnegie Mellon & Temple Universities, 2012.
4 The Aftermath of a Mega Data Breach: Consumer Sentiment, Ponemon Institute, April 2014
5 2014 Identity Fraud Report: Card Data Breaches and Inadequate Consumer Password Habits Fuel Disturbing Fraud Trends, Javelin Strategy & Research, 2014
6 The Aftermath of a Mega Data Breach: Consumer Sentiment, Ponemon Institute, April 2014
7 The Aftermath of a Mega Data Breach: Consumer Sentiment, Ponemon Institute, April 2014