Effects of the Equifax Data Breach, Part 3: Customer mistrust
Within months of the Wells Fargo fake account scandal, top bank executives including CEO, John Stumpf, were out. It’s no surprise that we’re seeing a similar fallout just weeks after the Equifax security breach. When Equifax CEO, Richard Smith, recently announcing his retirement, it was another example of the impact a data breach can have on an organization’s chain of command. According to the article, “Equifax fallout: Consumers are frustrated, confused and unprepared,” there are many ways a security breach can impact a business and its customers. A survey by CyberScout and the Identity Theft Resource Center revealed how consumers react when their personal information is compromised. Some of the findings included:
- Equifax stock plunged 18% four days after the breach was revealed
- 41% said they wouldn’t do business with the breached company again
- 77% of consumers were frustrated, angry and anxious after they were notified about the breach
- Yet, despite all the anxiety and frustration, less than half of the respondents took basic steps to protect themselves after the breach
One of the ways a data breach hurts a company’s brand reputation is the damage it has on customer trust and their profitable customer relationships. The loss of trust affects every aspect of an organization, including acquiring new business, retaining existing customers and market share. According to Matt Cullina, CEO at CyberScout, following a data breach consumers aren't sure who to trust. This can lead to lost business and lost potential revenues. Taking proactive steps is the best way individuals can protect themselves following a data breach.
“Consumers understand that data breaches put them at real risk, but they don’t know who to trust or where to turn. We need to start treating identity theft protection like we treat the risk of heart disease—with lifetime preventive measures, regular checkups and expert support. After the Equifax breach, it is no longer a question of if you will be affected—consumers need to operate under the assumption their critical data, such as Social Security numbers, has been compromised, and take steps to protect themselves proactively.”
As we’ve learned, one year later Wells Fargo continues to face fines as it remains focused on rebuilding trust with its customers. Similarly, Equifax and other companies that are hit by hackers also face a long road ahead as they work on restoring their business reputations and repairing their relationships with consumers. Be sure to check back next week when I will explore how long victims of the Equifax security breach will need to protect themselves from identity fraud.