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Study: Data Breaches Make Huge Impact On Brand Reputation

Consumers rank data breaches and poor customer service high in their effects on brand perception.

Data breaches can have as much impact as poor customer service in their effects on brand reputation, according to a study published Wednesday.

The new survey, "The Aftermath of a Mega Data Breach: Consumer Sentiment," was conducted by the Ponemon Institute and sponsored by Experian's Data Breach Resolution unit. It asked more than 700 consumers about their attitudes toward a company's brand, and their willingness to buy in the wake of specific events.

According to the study, the three occurrences that have the greatest impact on brand reputation are data breaches, poor customer service, and environmental disasters. These incidents were selected ahead of publicized lawsuits, government fines, and labor or union disputes.

Breaches also have a major impact on customer fears about identity theft, the survey says. Prior to having their personal information lost or stolen, 24 percent of respondents said they were extremely or very concerned about becoming a victim of identity theft. Following the data breach, this concern increased to 45 percent, Ponemon says. Almost half of respondents feel their identity is at risk for years or forever.

Many of the respondents were affected by a retail (35 percent), credit card (35 percent), or social media (19 percent) breach in the last two years. A majority of respondents feel the personal information that would cause the most stress or financial loss if exposed or stolen would be a Social Security number (78 percent of respondents), followed by an account password/personal identification number (71 percent).

Yet despite being notified about a breach affecting their information, many consumers have not taken action, the survey says. A majority of respondents felt stress as a result of being affected by a data breach (76 percent), but this did not lead to action: more than 50 percent did not take any steps to protect themselves from identity theft afterwards.

"This inaction may be a result of data breach 'fatigue,' as 30 percent of those surveyed received at least two data breach notifications and 15 percent received three in the last two years, while 10 percent received more than five," Ponemon reports. "Unfortunately, more than one-third of consumers ignored the data breach notification from the company and did nothing. However, almost 30 percent of consumers accepted the offer of free identity protection services."

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