A new study examines the potential loss of business caused by data breaches, specifically those occurring in the retail, healthcare and financial sectors.
The report, released Tuesday, called “Avoidable Collateral Damage from Corporate Data Breaches,” (PDF) found that 33 percent of consumers would avoid further business with a retailer post-breach.
In the study, the retail sector faced the stiffest reactions from those polled, as 30 percent of individuals said they would search elsewhere for a new healthcare provider. Twenty-four percent of respondents said they would switch banks or credit card providers if their financial institution suffered a breach.
The study, which polled responses from 5,634 U.S. adults in October 2013, was representative of the U.S. census demographics distribution. Javelin Strategy & Research in Pleasanton, California conducted the study, which was commissioned by sensitive data management solution provider Identity Finder.
“Once thought to be a theoretical consequence, new evidence clearly shows consumers become less apt to open their wallets and patronize a company after a data breach,” the report said. “In addition to potential lost business and goodwill, a breached company may find itself saddled with the cost of litigation and subsidizing identity protection services for affected consumers.”
After Target's massive data breach over the holidays last year, a customer satisfaction study noted “meaningful decreases” in overall customer approval of the business. Furthermore, Standard & Poor lowered the mega-retailer's credit rating in the aftermath of the incident.
On Thursday, Al Pascual, senior analyst of security for risk and fraud at Javelin, told SCMagazine.com in an interview that goal of the report was to dig into breach costs to businesses, outside of the standard expenditures (like customer notification or identity protection services).
“We wanted to take a look at the issue affecting three main industries,” Pascual said. “There's a lot that puts a dollar and cents [loss] on the cost of breaches, but often the cost of some effects are overlooked.”