Is Stolen Customer Data Really a Huge Problem?

 

Is Stolen Customer Data Really a Huge Problem?

With the rising incidents of hacking, you are forced to think if we are living in an epidemic of data breaches, with no safety for bank accounts and financial details. A number of laws protect consumers from any financial losses linked to hacking attacks. Such laws require banks and merchants to bear the cost.

In the recent past, there has been a drop in the losses for banks and merchants, thanks to the adoption of new data security strategies to prevent hacking and intrusions and safeguard stolen customer data from being misused.

 

Most Data Breaches are Not That Serious!

Despite the incidents of data breaches, the episodes of financial losses for customers are on the decline.

However, consumer fears are stoked by data coming from online data security firms, which often portray a dangerous situation, highlighting data breach statistics in order to convince consumers to buy their services.

The actual impact of data breaches turns out to be less than what is highlighted. When hacking attacks are first reported, the sheer size of hackings shocks a vast majority of people, but reporters hardly make efforts to check on the actual consequences of such breaches.

The more troubling identity theft is when hackers open new accounts in an unsuspecting person’s name.

However, according to Javelin Statistics and Research, such statistics make up just 5 percent of the total figure. But this does not mean that data security is not a serious problem. In fact, stolen customer data could be put to different uses by hackers. The recent episodes at Ashely Madison as well as Sony Pictures clearly show how damaging data breaches can prove.

 

But There Are Serious Threats Too!

Moreover, we cannot ignore threats to national security from foreign hackers if they get hold of secret documents and military maps. This certainly raises serious geopolitical concerns.

For banks and institutions that have to bear the financial burden and implications of stolen credit card numbers, it can pose a serious threat to their reputation and cause a dent in their finances, for the expenses are real.

According to The Nilson Report, last year hackers were able to accumulate $7.8 billion in fraudulent purchases. Statistics reveal that while banks paid 62 percent of the total amount, merchants paid the rest.

Over a period of time, banks have been able to devise security methods to detect fraudulent acts in order to curtail costs. Some such measures include looking for patterns in card purchases. Some banks have even gone ahead with purchasing stolen cards in the black market to identify data and security breaches.

The American Bankers Association accepted that the cost of reissuing cards was the biggest expense for banks in late 2013 (Target Brecah Impact Survey – PDF). When we talk of data breach, it is important to consider the type of stolen customer data. Hackers generally look for stealing Social Security numbers. Because of this, people should be aware that help is available to them at the Social Security office locations in Arkansas, or the offices in their state should their Social Security number ever fall into the wrong hands.

Banks are introducing new cards with E.M.V. chips to prevent fraud, which make counterfeiting cards next to impossible. It is important for businesses as well as individuals to take steps to stop data thefts from happening.

Related: Will Retailers Be Ready for EMV by October 2015?

 

Bottom Line

So, is stolen customer data really a huge problem? Well, it really depends on the type of data that is stolen. Basically, stolen Social Security Numbers that can be used to perpetrate identity theft are the biggest problem as recovery from identity theft is a very time consuming and costly affair. Credit Card numbers if stolen don’t pose such a big risk as they can easily be cancelled and new ones issued.

 

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