Consumers punish companies for data breaches

Consumer data security breaches are leading to customer revolt and an average cost per incident of $14m, according to a brace of surveys out this week.

One in five US consumers quizzed by Ponemon Institute said they immediately terminated their accounts with vendors that lost their information. An additional 40 per cent polled by the organisation's National Survey on Data Security Breach Notification considered taking their business elsewhere after receiving notifications of information mishandling. The survey polled 9,000 consumers, 12 per cent of whom had received notices of information security breaches.

A parallel study conducted by Ponemon estimates an average cost of $14m per security breach incident, with costs ranging as high as $50m. The survey, Lost Customer Information: What Does a Data Breach Cost Companies?, is among the first to look at data from actual cases of lost customer data. Covering 14 separate incidents, the research encompasses 1.4m compromised data records and an estimated total of $200m in resulting losses. Total cost estimates include the actual cost of internal investigations, outside legal defense fees, notification and call center costs, PR and investor relations efforts, discounted services offered, lost employee productivity, and the effect of lost customers.