Loyalty breakdown—the consequences of a breach

Aug 29th, 2014 / Category: Managed File Transfer

Companies that experience a data breach aren't home free once they detect and neutralize the threats that jeopardize their networks. In fact, extinguishing the flames of the attack is a relatively easy task when compared with sweeping away the ashes of the aftermath. The loss of private client information such as financial or personal details can mean the end of the line for many companies that don't initiate adequate damage control measures, and even if a firm does survive the initial stretch of uncertainty, long-term effects on brand reputation can linger with a negative air.

Steer clear, consumers
Consider any of the major breaches that occurred in the past year. Upon hearing the news of a hack or widespread data loss, the reaction of the typical consumer is to avoid the profiled organizations altogether, or keep their credit cards firmly in their wallets if they do enter brick-and-mortar locations. Even if a breach did not result in any lost financial assets or affected shoppers in any notable way, bad publicity is enough to keep any semi-savvy consumer away from whichever brand may be in the IT security spotlight. 

How does the average individual respond to the knowledge of a high-profile breach? According to a Triple Pundit article, a report titled "Retail's Reality: Shopping Behavior After Security Breaches," revealed the hard facts of common shopper reactions. For instance, 36 percent of consumers will buy fewer goods from a breached brand, while 12 percent will abandon the company entirely.

While this may not seem like a significant loss at first, the source noted that 79 percent of shoppers plan to only use cash when interacting with organizations following a breach, diminishing the likelihood of major impulse purchases and eliminating the possibility of e-commerce shopping altogether.

Cleanup in the data aisle
Even the most well-respected companies can lose loyal followers after suffering data loss, and according to the source, the situation can be made worse if decision-makers aren't upfront with the facts surrounding the incident. According to the Press Herald, consumers prefer to be told the truth when it comes to breaches, and hiding information can only result in greater reputation damages in the long run.

"There have been so many breaches where companies have held information for so long that more disclosure would force companies to do a better job being accountable to consumers," said Ed Mierzwinski of the U.S. Public Interest Research Group, as quoted by the source. "It's a real pain in the neck to clear your name. You have to spend time—a lot of time—clearing your name. And you don't get paid for that."

Business leaders must protect their networks at all costs, integrating solutions such as secure file transfer software to ensure the safety of user information in every single transaction.