Study Reveals that Data Breaches Undermine Consumer Confidence

In the wake of massive data breaches at businesses, educational institutions and medical facilities, consumers are modifying their purchasing behavior, including online buying, out of concern for the security of their personal information. The 2007 Consumer Survey on Data Security from Vontu and the Ponemon Institute found that 62 percent of respondents have been notified that their confidential data has been lost.

The high percentage of individuals that have been notified of a data loss event has contributed to increased security concerns, as the vast majority of those notified reported concern about the event. These data breaches have had a direct impact on consumer buying behavior, including reluctance to use their credit or debit card to make a purchase with a Web merchant they don't know, and unwillingness to provide their Social Security number online.

"Our research clearly shows that data breaches are affecting consumers' trust in the organizations with which they share their data and, ultimately, their buying behavior," said Dr. Larry Ponemon, chairman and founder, Ponemon Institute.

The study finds that a majority of respondents are changing their purchasing behavior due to heightened security concerns:

• 62 percent of respondents have been notified that their confidential data has been lost.
• 84 percent of those respondents reported increased concern or anxiety due to data loss events.
• 62 percent of respondents said that they would be more upset with a company that lost their information due to negligence than if that company lost their information as the result of theft.
• 36 percent of respondents stated that they would not use their credit or debit card to make a purchase with a Web merchant they don't know.
• Respondents who have received notification are more cautious when sharing their credit card (43% vs. 32%) and debit card (44% vs. 32%). In other words, the findings suggest that breach notification may affect consumer behavior.
• 45 percent said they would not provide their Social Security number on a Web site.

In addition, the 2007 Survey on Consumer Privacy identified the following as the Top 5 Data Privacy Concerns of consumers:

• Medical Records
• Pharmaceutical History
• Credit Card Number
• Debit Card Number
• Social Security Number

In addition, most respondents stated that they would be most concerned if their healthcare provider, pharmacy or employer lost their information.

"We live in a wide open world where information can very easily be copied, sent or shared, and over 100 million consumers have been notified of a breach of their personal information. Unfortunately, this has led consumers to have significant concerns about the security of their data," said Joseph Ansanelli, CEO of Vontu. "Smart companies understand this and are investing in solutions to protect against the loss of this sensitive data and ensure the trust of their customers."

Study Reveals Data Privacy Age Gap

The study also identifies an apparent privacy age gap, as younger respondents (between the ages of 18 to 25 years) appear to be less concerned about the protection of certain data types when compared to older respondents (age greater than 65 years). Older respondents are more concerned about the following data categories:

• Movie Rental History
• Employment History
• Home Value
• Tax Information
• Social Security Number

In contrast, the one area where younger respondents expressed greater concern than older respondents was in maintaining the privacy of their Web search engine terms and activity.