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Hacked companies could experience customer exodus

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December 1, 2016

We've seen more evidence today that many hacked companies and organizations could subsequently suffer a customer exodus for their lack of security concerns and overall 'laissez-faire' attitude.

Case in point: after TalkTalk's notorious data security breach, it's now 101,000 of its customers that have walked away for good, and they are not coming back anytime soon.

About 48.2 percent of the 1,000 customers questioned by OnePoll claimed they would cancel accounts if a provider of theirs suffered a data security breach.

Additionally, a 35 percent portion said they would actively avoid choosing a company that had been hacked before if they were switching providers.

Alex Mathews, EMEA technician manager at Positive Technologies, the cyber security firm that commissioned the survey, commented- "As folks wake up to the sensitivity of the data stored about them by the companies which provide their phones, banking, healthcare, leisure and more, they become ever more protective."

"These various organizations are responsible for collecting and protecting massive amounts of data, yet the last twelve months have proven they can fall prey to hackers.

TalkTalk, Yahoo, Three and even Tesco Bank are all respectable brands that have been compromised in some manner, with customers left feeling violated.

"At the end of the day, they vote with their feet and walk away. It takes a lot of time and money to acquire new customers, but only seconds to lose them," he asserted.

The study also discovered that about 45.3 percent of respondents said they would claim for damages if their personal details were stolen, with a further 24 percent saying they would join with others to bring a class action lawsuit.

What consumers say to someone in a survey is not necessarily what will happen in practice, however. Class action lawsuits are far more common in the United States and some have come as a direct result of security breaches.

Case in point: Ronald Schwartz launched a lawsuit against Yahoo on behalf of all its U.S. customers shortly after it was involved a historic security breach affecting million of users.

Security breaches can also have a direct financial impact, as evidenced by the £2.5 million stolen from 9,000 customer accounts at Tesco Bank at the start of November.

A recent 54-country, 24,000-respondent survey by the Internet Society found that 40 percent of users would avoid doing business with a company that had suffered a data security breach. The group has tabled a number of recommendations on resolving security problems, as previously reported.

Source: Positive Technologies LLC.

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