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How often are data breaches really reported?

January 28, 2014 by Kevin Christensen — Vice President, Audit, SHAZAM

Many Target customers are upset, and understandably so. In their view, the retailer did not do enough to protect their private information from the crooks.

Consumers' confidence in the security of their data is shaken, and not just among Target's customer base. It's an incident that has raised questions about the security practices of every major retailer pulling down and storing mag-stripe data millions of times each day.

But what consumers might not realize is that a significant number of companies don't even tell their customers when they have experienced a breach.

At least that's what the results of a recent survey indicate. As reported by Digital Transactions, a full 57 percent of surveyed malware analysts working for large and small enterprises alike said they have dealt with a breach that their companies never reported to customers or other parties.

Chances are, most of these non-reporters operate in industries that are, today at least, not highly regulated. That's one of the good things about being a part of a financial industry that is highly regulated. (Did I just say that?)

Data breaches and the potential for them are areas of intense examination, focus and review. The penalties for failure to report in our industry would be extremely damaging, not only from a financial perspective, but also from a reputational perspective.

This is a point that can be emphasized with your customers to help alleviate anxieties brought about by events such as the Target breach.

This idea that "what customers don't know won't hurt them" is pretty dangerous. Even if they are not forced to do so by regulators, all enterprises should have a plan in place for notifying consumers when their information has been exposed.

As we've seen with Target and similar breaches in the past, deputizing cardholders in the fight against these data thieves has a dramatic impact on the mitigation of losses.

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