The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Major security data breaches have hit big businesses across the globe in 2014. Big names such as eBay, Target, The University of Maryland and PF Changs have all been targeted. Most consumers shrug off these data breaches as a cost that is associated with e-commerce. Most consumers don’t realize that they will end up footing a portion of the data breach bill regardless of whether or not their personal information was compromised during the data breach. Authentify has created an infographic that shows the average cost of an average data breach as it trickles down to the consumer.
So how exactly does the cost get passed down to the consumer you might ask? Retailers will pass these costs through to consumers by charging higher prices for the same services. Where retails are on the hook for fraudulent online orders, their insurance pays the bill. This drives up the costs for all policy holders, which is passed on to shoppers by higher prices. Credit card providers have to roll back fraudulent charges that are made on stolen cards. They also have to reissue cards for everyone who is affected and that can cost up to $10 per card. These costs are also passed on to consumers through higher interest rates and credit card fees. To learn more about this, check out the graphic below.
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How Consumers Foot The Bill For Data Breaches
The fallout from the data breach at TARGET shows how expensive the attacks can be
$15.9 million in severance for their CEO, who resigned following the breach
$2.2 billion in possible fraudulent charges on stolen cards
$1.1 billion in possible fines
$443 million Target’s 40% fall in profits following the breach
But What About An “Average” Data Breach?
|Total Average Cost of a Data Breach
In 2013, there were 617 recorded data breaches, not including the Target breach
|Average cost of notification per customer||$5|
|Average cost of card cancelleation and credit monitoring per customer||$30|
|Hourly forensic examination||$2,000|
|Average legal defense||$500,000|
|Average legal settlement||$1,000,000|
$5,403,644 Average organizational cost of a breach
28,765 Number of records compromised in an average data breach
$188 Average cost per compromised record
So How Do I End Up With The Bill?
- Retailers pass these costs on through higher prices.
- Where retailers are on the hook for fraudulent online orders, their insurance pays the bill.
- This drives up costs for all policy holders, which is passed on to shoppers through higher prices.
- Credit card providers and banks have to roll back fraudulent charges made on stolen cards.
- They also have to reissue cards for anyone who might be affected. Each card costs $10 or more.
- These costs are passed on to consumers through higher interest rates and credit card fees, up to a 5 – 7% increase in some cases.
So What’s The Total Damage?
$140 billion in direct costs like those passed on to the consumer, and indirect costs, like higher taxes to pay for law enforcement
500,000 lost jobs, particularly in high-end manufacturing
And Is There Anything Else To Worry About?
Data breaches contribute to over half of all cases of identity theft
66% of identity theft victims suffer a financial loss
$9,650 is the average financial loss for an identity theft victim
Only 14% of identity theft victims have to pay these costs out of pocket, and most of those pay less than $100
But 10% of identity theft victims have to spend over a month resolving financial and credit problems
Presented by AUTHENTIFY