Business Losses from ID Theft Equate to Millions

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How are businesses affected by identity theft?

Business Losses from ID Theft Equate to Millions

Most reports and studies about identity theft focus on the costs and consequences for individuals. However, the costs associated with ID theft crimes for businesses easily climb to millions of dollars. Here are just a couple significant facts and identity theft statistics from a 2006 study conducted by the Ponemon Institute:

U.S. companies average identity theft-related costs of $182 per compromised record. While that figure averaged $660,000 per company in notification expenses and indirect costs, the total estimate, including lost business, tops $2.5 million. This staggering amount also includes costs and fees associated with legal expenses, fines, investigation, auditing, class action litigation, public relations damage control, and setting up monitoring, remediation practices, and a dedicated customer support phone number.

The most common source of compromised data occurs from lost or stolen laptops, accounting for 45 percent of all incidents, followed by 29 percent attributed to outsourcing companies and third party partners. Twenty-six percent of data leaks occur from lost or stolen backup files. Contrary to the widely publicized occurrences of stolen data through the usage of malware programs, it comes in last on the list at only 10 percent.

Since it is customer data that is stolen, the company itself is viewed as the catalyst for a potentially massive ID theft crime spree and there is little empathy from customers for the company's losses. Businesses must take action to protect and secure customer data. As evidenced in the statistics above, stringent security procedures for the hardware, like laptops and backup tapes, will guard against the most prominent occurrence of data theft.

As an individual, it is your responsibility to ask questions about how your personal data is handled and secured. To find out what questions to ask, or to get advice on what to do if a company that you deal with has experienced a security breach visit PrivacyRights.org.

   

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