Card-Data Thefts Increase Jitters Among Online Consumers

The steady drumbeat of card-data breaches is a major factor causing rising anxiety among consumers who use the Internet for shopping and other financial transactions, the Conference Board reported today. In a quarterly survey of 10,000 households sponsored by the New York-based business organization, 13% of all online consumers say they or a member of their household have been a victim of identity theft. More than half of consumers are more concerned about the safety of their financial data online, while many have changed how they use the Internet to be more secure. Almost 70% of online consumers have installed additional security software, 54% reject promotional offers, and 41% are buying less. Among Internet activities, online banking raises the most concern among consumers (nearly 60%), according to the survey, followed by online purchases (close to 50%). The survey, called the Consumer Internet Barometer, canvasses a different group of 10,000 households each quarter. “Misplaced or stolen data from major financial-service institutions such as Citigroup, Bank of America, and Wachovia, and this week's admitted mishandling of data by the credit card processing company CardSystem Solutions, have increased consumers' concerns about online security,” said Lynn Franco, director of The Conference Board's Consumer Research Center, in a statement. “Consumers have taken steps to be more cautious, which is a good thing. The downside is the negative impact to online retailers that may slow the growth of e-commerce.” The latest incident of card-data theft was revealed last Friday, when MasterCard reported a compromise at a Tucson, Ariz.-based merchant processor called CardSystems Solutions Inc. had exposed the names, account numbers, card-verification values, and other card-swipe data on 40 million cardholders (Digital Transactions News, June 20). The company, which admitted it had been improperly storing the data, later said information on about 200,000 accounts had actually been taken. Reports have surfaced of data from the attack cropping up on black-market Internet sites that sell stolen card data, and at least one opportunistic phishing attack has reportedly been launched since the theft was reported. On average, 70% of households respond to the surveys from The Conference Board, which weights the data to reflect the latest household demographic information. The most recent survey occurred during the March to June quarter.