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Brits ‘more likely’ to change spending habits after a data breach

960 640 Stuart O'Brien

The consequences of a data breach have a greater impact in the UK versus the United States, according to new data.

41% of British consumers said they will stop spending with a business or brand forever following a data breach, compared to just 21% of US consumers.  

The research into consumer trust and spending habits was conducted by payment security specialists PCI Pal, and pointed to some clear cultural differences between the two countries.

The survey found that 62% of American consumers would instead stop spending for several months following a security breach or hack, with 44% of British consumers agreeing the same. 

Over half (56%) of all UK respondents were more reticent to give credit card details verbally over the phone than their American counterparts where it was found that four out of every ten (42%) of US respondents were uncomfortable reading out their details.

US consumers were generally less accepting to provide payment details over the phone with only 15% saying they would “hand over their information, no questions asked”, compared to a quarter of UK consumers. Instead 38% of American’s would ask for an online alternative to complete a transaction, while 32% of Brits said they would “hang up and find an alternative supplier.”

“Awareness of data security is something that is on everyone’s radar, yet our UK and US surveys have highlighted some real differences of opinions and traits, when comparing attitudes to data and payment security between the two countries,” said James Barham, CEO at PCI Pal.

“UK consumers certainly seem more guarded with providing personal information, such as payment card details, over the phone, yet the US is catching up fast. Similarly, if a security breach has occurred at an organisation, Brits appear more likely to avoid that organisation in future, and instead go elsewhere. In my opinion, 2019 is the year that organisations need to take steps to provide far clearer assurances to consumers as to how their data is being captured, processed and stored otherwise customers are not going to wait, and they may find them going elsewhere for their purchase.”

Looking at trust in businesses and brands, 55% of UK respondents felt they could trust a local store with their data more than a national company. They felt a local store was more likely to care about their reputation (30%) and hackers were less likely to target a local store as it is smaller (25%) while only 22% felt a national company would be more secure as they follow more security protocols.

In stark contrast, the reverse was true in the US with only 47% of respondents feeling they could trust a local company more than a national chain. In fact, 28% felt a national company would be more secure as they follow more security protocols, while 25% felt they have more money to invest in security protocols. 

Almost a third (31%) of UK consumers stated that they would spend less with brands they perceive to have insecure data practices, compared to just 18% of US survey respondents.

Security breaches – A high price tag for UK business this Christmas

960 640 Stuart O'Brien

Forty-four per cent of UK consumers will stop spending with a business or brand for several months in the immediate aftermath of a security breach or a hack.

That’s according to new data from payment security specialist PCI Pal that, even more significantly, shows a further 41% of consumers will never return to a brand or a business post-breach, representing a potentially significant loss of revenue.

The findings  suggest that a combination of high-profile recent breaches, headlines devoted to new data privacy regulations such as the GDPR, and personal experience have put security concerns at the forefront for UK consumers.

Over a third (38%) confirmed they have personally suffered the negative consequences of a data security breach.

Meanwhile, consumers reported that even being perceived as having insecure data practices can be enough to incur spending penalties: 31% reported that they spend less with brands they perceive to have insecure data practices, while over a quarter (26%) say they stop spending completely if they don’t trust a company with their data.

The findings suggest that it’s not just online threats that worry consumers – with 76% uncomfortable with providing payment information, such as credit card details, over the phone. Specifically, almost a third (32%) said they would hang up and find an alternative payment option, while nearly a quarter (24%) would ask for an online payment option and a further fifth (20%) would enquire as to how the data is being captured and whether it is safe.

Interestingly, when looking at the research findings by age group, 41% of those aged 18-24 said they would give their payment information over the phone with no questions asked, compared to just 14% of those aged 55-65.

Finally, from an industry perspective, consumers were asked which verticals they consider to be the least secure or more likely prone to a security breach, 41% of consumers said the financial sector, followed by 40% suggesting retail and 35% suggesting the travel industry.

“While security breaches are not new, consumers’ attitudes towards them appear to be changing significantly, with the vast majority of those surveyed now reporting that trust in security practices, or lack thereof, influences not just where but also how, and how much they are prepared to spend,” said James Barham, CEO at PCI Pal.

“What’s really interesting is how consumers are increasingly questioning data security practices. Nearly half of those surveyed know they should check a company’s security processes and 22% said they question businesses directly or research how an organisation safeguards consumer data. This suggests a real change in how consumers prioritise privacy and security. This should act as a real wake-up call to consumer-facing brands: they need to adopt stronger security practices, especially for those operating contact centres where payments are handled over the phone if they want to keep customers loyal and spending with them.”