SOURCE: Ponemon Institute

April 15, 2008 14:17 ET

Ponemon Institute Examines Consumer Response to Data Breach Notice

Study Reveals 63 Percent of Consumers Dissatisfied With Data Breach Notification and Response Methods

TRAVERSE CITY, MI--(Marketwire - April 15, 2008) - A new study conducted by the Ponemon Institute shows that consumers are dissatisfied with the notification process used by companies following a data breach affecting their personal information. Sponsored by ID Experts, the Consumer's Report Card on Data Breach Notification revealed 63 percent of survey respondents said notification letters they received offered no direction on the steps the consumer should take to protect their personal information. As a result, 31 percent said they terminated their relationship with the organization. In addition, 26 percent of respondents took no action after being notified and 57 percent said they lost trust and confidence in the organization.

The Consumer's Report Card on Data Breach Notification is being released today when Ponemon Institute chairman and founder Dr. Larry Ponemon presents the study's findings at the Federal Trade Commission workshop, "Protecting Personal Information: Best Practices for Business." The one-day public event takes place at 8:00 a.m. at the Thorne Auditorium of the Arthur Rubloff Building on the Chicago campus of the Northwestern University School of Law.

"Data breach notifications are a failure if individuals do not have a clear understanding of their level of risk, available support, and the steps they need to take to respond to the loss or theft of their personal information," Ponemon said. "Our research strongly suggests that legal compliance is the primary goal of many companies' notification efforts. This approach does not serve the best interests of consumers and contributes to a breakdown in trust that can impact a company monetarily as a result of an increase in customer defection."

Other key findings from the Consumer's Report Card on Data Breach Notification include:

--  Fifty-five percent of respondents had been notified of two or more
    data breaches in the previous 24 months, including 8 percent with four or
    more notifications;
    
--  More than 55 percent of respondents state that the notification about
    the data breach occurred more than one month after the incident, and more
    than 50 percent of respondents rated the timeliness, clarity, and quality
    of the notification as either fair or poor;
    
--  Less than one-third of respondents said that the organization offered
    services to protect them from further harms; of those who opted into such
    services, 97 percent rated them good to excellent; and,
    
--  Two percent of respondents that had been notified of a data breach
    experienced identity theft as a result of the breach, while 64 percent were
    unsure if they were a victim of identity theft.
    

"The fact that 31 percent of respondents terminated their relationship with the organization is very alarming to the bottom-line," said Rick Kam, president of ID Experts. "Consumers need a mix of forthright timely notification, complementary protection services and recovery assistance to feel an organization has gone the extra mile to make up for such a critical mishap. Considering the cost of customer acquisition in today's market, businesses need to invest in keeping happy customers."

The Consumer's Report Card on Data Breach Notification was derived from the responses of 1,795 adult-aged respondents located throughout the United States. Copies of the Consumer's Report Card on Data Breach Notification will be available by request after April 15, 2008 by visiting http://www.idexpertscorp.com and clicking on the New Ponemon Study link.

About ID Experts

ID Experts provides identity theft protection services for individuals, corporations and the public sector. Unlike other identity theft protection service providers that rely solely on credit monitoring, ID Experts takes a uniquely personal approach to identity protection -- whether it's a single individual or family, or up to the largest corporations, government agencies and universities, ID Experts ensures each and every individual receives protection and recovery assistance. Today, ID Experts protects more than 3 million individuals nationwide from identity theft. These customers benefit from ID Experts' team of experienced identity recovery advocates who have a 100 percent success rate in restoring victims' identities to pre-theft status. For more information visit http://www.idexpertscorp.com.

About the Ponemon Institute

The Ponemon Institute© is dedicated to advancing responsible information and privacy management practices in business and government. To achieve this objective, the Institute conducts independent research, educates leaders from the private and public sectors and verifies the privacy and data protection practices of organizations in a variety of industries.