Businesses facing post breach financial fallout by losing customer trust

44% of Americans, 38% of Brits, 33% of Australians, and 37% of Canadians have been the victim of a data breach, according to newly released research conducted by PCI Pal.

The findings suggest that a combination of recent high-profile data breaches in each region, the development of assorted laws and regulations to protect consumer data privacy (e.g. the California Consumer Privacy Act, Europe’s General Data Protection Regulations, Canada’s Personal Information Protection and Electronic Documents Act, Australia’s Consumer Data Right, and others), and personal experience have made security top-of-mind for consumers around the world.

As a result of the influx in cybercrime, consumers are increasingly aware that they are in no way exempt from data breaches, especially as more people are forced to resolve the short and long term damages caused by an organization’s weak data privacy practices.

In response, consumers around the world are putting security front and center and leveraging their spending power to hold businesses accountable:

• In the US, 83% of consumers claim they will stop spending with a business for several months in the immediate aftermath of a security breach, and over a fifth (21%) of consumers claim they will never return to a business post-breach.
• In the UK, 44% of consumers claim they will stop spending with a business for several months in the immediate aftermath of a security breach, and 41% of consumers claim they will never return to a business post-breach.
• In Australia, 43% of consumers claim they will stop spending with a business for several months in the immediate aftermath of a security breach, and 43% of consumers claim they will never return to a business post-breach.
• In Canada, 58% of consumers claim they will stop spending with a business for several months in the immediate aftermath of a security breach, and a fifth of consumers claim they will never return to a business post-breach.

Whether it’s adjusting how much they spend or deciding to avoid the company altogether for several months or even forever, these figures represent significant potential revenue loss that many businesses may not be able to recover from.

The consumer-facing consequences of a data breach has resulted in consumers reconsidering the safety of common business practices in obtaining data. Consumers in every region expressed concerns about having to read their credit card information over the phone, and many are only comfortable sharing information over the phone with certain companies that they trust:

• In the US, over 40% of consumers are uncomfortable reading their credit card information over the phone and 58% of consumers are only comfortable sharing information over the phone to select companies that have earned their explicit trust
• In the UK, 55% of consumers are uncomfortable reading their credit card information over the phone and 44% of consumers are only comfortable sharing information over the phone to select companies that have earned their explicit trust
• In Australia, 49% of consumers are uncomfortable reading their credit card information over the phone and 43% of consumers are only comfortable sharing information over the phone to select companies that have earned their explicit trust
• In Canada, 42% of consumers are uncomfortable reading their credit card information over the phone and 58% of consumers are only comfortable sharing information over the phone to select companies that have earned their explicit trust

Consumers also report that when it comes to trust in security practices, not all industries are created equal. The results showed that consumers trusted the retail and travel industries least, with 19% and 16.4% of US consumers, 40% and 35% of UK consumers, 50% and 40% of Australian consumers, and 65% and 41% of Canadian consumers rating these industries as the worst when it comes to security practices.

While these findings suggest consumers have significant concerns about businesses’ data security practices, the report also details several steps companies can take to regain consumer trust, before and after a data breach, such as undergoing regular security audits or announcing compliance with data privacy regulations.

“With the ongoing introduction of new data privacy regulations around the world, companies face significant fines in the event of a breach,” said James Barham, CEO at PCI Pal.

“But our research shows they may face an even bigger financial consequence in the aftermath of a breach, with the loss of customer loyalty and trust. To avoid such implications, companies should adequately prepare themselves for the increasing likelihood that a data breach will inevitably occur.”