In Part 1, we discussed how a recent survey found that almost 90 percent of respondents were highly unlikely to continue to do business with a company that suffers a credit card breach.
But according to Information Age, this souring of patron opinion does not stop at credit card attacks alone — 80 and 76 percent of those surveyed said they would stop frequenting businesses that suffered a telephone number or email attack, respectively.
The message from consumers is clear: there are too many businesses out there to take a risk on ones that are not properly guarded with a stringent enterprise security infrastructure. Several of the companies breached in 2013 learned this lesson the hard way when they suffered a decline in patronage after news of their breach surfaced.
1. Neiman Marcus: Typically known for its chic displays and metropolitan appeal, Neiman Marcus earned a different kind of public attention when it was hit by a data breach during the 2013 holiday season. The attack resulted in the theft of more than 1 million credit card numbers, according to The Online Privacy Blog.
But that is not where the problems ended for the retailer. In reporting store revenue for 2013’s fourth quarter — the period of time when the breach occurred — the company admitted it suffered losses in the millions of dollars, according to The Dallas Morning News. These declines can be directly tied to the attack and its fallout.
2. Target: While the attack on Neiman Marcus was bad for the store, it pales in comparison to the breach on Target’s internal system. It was one of the largest-scale and costliest retail breaches of all time, incurring $61 million in recuperative costs for the retailer and leading to a large decline in customer trust — as evidenced by fourth quarter numbers.
According to Forbes, Target’s profit plummeted by almost 50 percent at the end of 2013 because of recovery costs and a significant decline in patronage, which began a descent in the immediate wake of the breach.
But Target’s troubles did not end with the year. Instead, the retailer continues to pay for the breach, both in money and in trust.
“As we plan for the new fiscal year, we will continue to work tirelessly to win back the confidence of our guests and deliver irresistible merchandise and offers,” the store’s CEO Gregg Steinhafel said in an official statement.
A Move Toward Stronger Enterprise Authentication Strategies Is Advised
No company wants to end up like Target or Neiman Marcus: publicly scrutinized, investigated by government agencies, and losing business. The prospect of a preventable incident like a data breach is enough to send many companies searching for better authentication solutions.
One company that has done this recently is the popular photo sharing site Tumblr, which announced that it has implemented a two-factor authentication system for its service, ZDNet reported. What this means is that users will have to go through two identification walls instead of one when logging into the site.
The system reduces the possibility of hackers breaking into the site, and in an age when cybercrime is everywhere, that kind of security cannot be taken for granted.