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Excerpt: How Much Is Your Customer’s Trust Worth?
Could Identity Theft Dry Up E-commerce? As a leader in your company's contact center and CRM practices, you'll know that cyber crime has come front and center. While companies are strategizing how best to utilize customer data, thieves are learning new ways to steal it. Consumers are learning that the danger they are in is growing exponentially.
What is the impact of data theft to your company, your customers, their trust and subsequently your bottom line? It's insurmountable, unless the need for data privacy and protection moves from the server room and the legal beagles to a corporate-wide customer strategy in which every employee is responsible for protecting customer data. Gartner's recent study about online security shows customer confidence is rapidly eroding. If customers' confidence continues to erode, how many of them will be willing to buy on the Web, disclose personal information or offer credit card information to contact center agents when placing orders on the phone?
The Role Of The Media In Alerting Consumers
Why is identity theft a hot topic right now? Part of the reason is that criminals have gotten much better at data theft. Another key component is the increasing awareness on the part of consumers. Several years ago, when the Ponemon Institute interviewed consumers, most did not fear identity theft. They did not know how prevalent it was or the effects it could have on their lives should they fall victim. As such, they did not pay much attention to it or demand changes from companies.
However, this is all about to change. Identity theft stories appear almost daily on every major cable news program and newspaper. It's even discussed in publications such as Parade Magazine and Popular Mechanics. Via this saturation coverage, the media is obliterating the na'vet' of consumers, driving the heightened outrage of customers and the need for change.
In researching further, we found that part of the reason customers have not put more pressure on companies to do something is that they were under the impression that credit card theft, for example, would not affect them very much. The facts, however, are astounding. Consider the following:
' According to the FTC study, nearly 10 million consumers were victimized by some form of identity theft in 2004 alone. That equals 19,178 people per day, 799 per hour and 13.3 per minute. Consumers have reportedly lost over $5 million, and businesses have lost an estimated $50 billion or more.
' Between 2001 and 2002, identity theft was about 11 to 20 percent, but increased by 80 percent in 2003, according to a Harris Interactive Study. ' Gartner reported that phishing scams have affected 2.4 million Americans, costing consumers, banks and merchants $929 million.
' The Secret Service and the FBI recently busted Shadowcrew.com, an online shopping bazaar for identity theft criminal organizations where thieves from all over the world bought and sold credit card numbers and identity documents.
' And while many credit card consumers thought that zero liability meant zero damage when their cards are stolen, all are quite surprised when they learn the truth. When a card is stolen, it can take years of paperwork and lost time and result in embarrassment, limited access to loans and the ability to buy property or qualify for a new job.
The Data Decision: To Protect Or Not Protect
With the most recent report of identity theft in which the VA's office reportedly lost the social security, name and address information of 26.5 million veterans and as much as 80 percent of active military service members via a stolen laptop, we are again reminded of how vulnerable we are. The list of companies reporting data theft, including ChoicePoint, Bank of America, T-Mobile, DSW Shoes, LexisNexis and the University of California Berkeley, just keeps growing. Why? Because most companies, when building their databases, did not foresee the danger of data theft or this new type of crime. With each evolutionary step we take to improve business comes a parallel challenge. In this case, the challenge is protection.
The Emotional Impact Of Customer Data Theft
One of the most surprising findings of the California Public Interest Research Group and Privacy Rights Clearinghouse study, 'Nowhere to Turn: Victims Speak Out on Identity Theft,' has to do with customer trust. While the financial impact of I.D. theft is certainly great, the worst is the emotional impact the situation creates. Stress, emotional trauma and damaged credit reputation were among the most difficult aspects to deal with. Victims reported feeling violated, helpless and angry. Consider if that is how most of your customers feel when they have trusted you with their data.
As the media stories gain momentum, from the hijacking of Paris Hilton's Sidekick to the theft of retired General John Shalikashvili's (former chairman of the Joint Chiefs of Staff) identity, which allowed scammers to open 273 new credit cards and run up $2 million in fraudulent charges, consumers are becoming outraged by the repercussions affecting ordinary people's lives. Consumers have reason to be angry. According to Besty Broder, FTC Identity Theft Expert, 'Even when you give your information to legitimate merchants, it's only as safe as that institution's safeguards.'