Data Breaches Have Little Impact on Consumer Behavior

Data Breach ResearchNews of hackers stealing customer information from all types of businesses seems to be an almost monthly occurrence.  From the most recent hack of patient information from Anthem, a major health insurance provider, to the massive breach of payment information from Target just before the holidays in 2013, consumers are more aware than ever that the information they entrust to businesses are vulnerable to theft.

It’s one thing when these computer criminals steal email addresses or phone numbers, but the vitality of consumers lives (and bank accounts) can be at stake when credit card information and social security numbers fall into the wrong hand.  While businesses are beefing up their IT systems to protect their customer’s information and providing free identify theft monitoring and protection when hack do occur, the key question is what changes actually happen in consumer behavior as a result of a hack?

Have you had fraudulent charges show up on your credit or debit card statement lately?  Chances are likely you have.  According to REPASS research, one in five households have been a victim of card fraud in the last year.  And all of this fraud adds up.  The August 2013 Nilson Report indicated that credit card and debit card fraud resulted in losses amounting to $11.27 billion during 2012.

After the Target data breach of their customers credit and debit card information, REPASS surveyed over 1,500 consumers across the country to understand the prevalence of card fraud and the impact of the Target breach on the American consumer.  With the numerous news report on the breach, it is not a surprise that 60% of those surveyed indicated that they were well aware of the Target breach.  Only 7% of those surveyed knew little or nothing about this significant event.  So with all this awareness (and a good chance of experiencing fraud themselves), what are consumers doing differently?  Our research seems to indicate very little.

When asked about changes consumers are considering for how they pay for goods and services, 45% of those surveyed indicated that they are not planning to make any changes in their payment behavior.  Only 30% of consumers are considering using cash more often than credit or debit cards for making payments, and 7% indicate they are considering using checks more often.

This is good news for the major card brands and others in the payments industry, since large shifts away from cards to cash and checks impacts their revenue.  But this is ultimately good news for consumers too.  Credit and debit cards are convenient and provide many benefits and rewards for consumers.  A shift away from cards would ultimately harm consumers and retailers.

The other good news, is that the US is finally adopting EMV standards and as more chip and PIN cards are issued, consumers and merchants will benefit from the greater payment transaction security and we will finally see a reduction of card fraud in the US.

Randy Burton Blog Bio