June 26, 2008, 12:00 AM

Consumers punish organizations that expose their data, but can be mollified

When consumers’ data is left vulnerable by retailers and other organizations, 55% of consumers lose faith in the entity and 30% say they will never buy from it again, according to a survey by Javelin Strategy & Research.

Katie Evans

Managing Editor, International Research

Organizations that expose consumer data pay a big price in consumer confidence, but can satisfy most customers by offering them fraud-prevention services, according to a survey of more than 400 data breach victims by research and consulting firm Javelin Strategy & Research.

55% of survey respondents say they have less confidence in the organization that exposed their data and 30% says they would never buy from that company again, according to the online survey conducted in May. 40% of respondents whose information was exposed but had not become victims of identify theft say they think the breach leaves them more vulnerable to criminals misusing their personal information.

A growing number of organizations that have exposed customer data have responded by offering affected consumers credit-monitoring of fraud-prevention services, often free for a year. That can be effective, the Javelin survey found. 55% of those offered an identity-protection service said they were satisfied with the handling of the data breach, versus 31% of those not offered such a service.

If offered a choice, 56% say they would prefer a service that prevents their personal information from being used fraudulently, versus 20% favoring a fraud-detection service and 19% a program that assists in resolving cases of fraudulent use of information. 5% gave other responses.

There have been more than 1,000 reported data leaks since 2003, the report says. Since January 2005, nearly 227 million records containing sensitive information have been exposed through security breaches, affecting more than 35 million U.S. consumers, according to Javelin.

Javelin will present its findings in a webinar, When a Data Breach Occurs, What Do Consumers Expect?, at 10:00am PDT on July 15.

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