Are data breaches creating smarter consumers?

[Audrey McNeil <audrey () riskbasedsecurity com>]

http://www.washingtonpost.com/news/get-there/wp/2014/10/20/are-data-breaches-creating-better-consumers/

A slew of recent security breaches — including at household names like
Target, Home Depot and JPMorgan Chase–don’t appear to be rattling Wall
Street or shoppers.

But they might be leading to smarter consumers, a new survey shows.

Security experts have long cautioned that one of the easiest ways to
protect against fraud is to make purchases with a credit card instead of a
debit card. The thinking is that when a breach happens, credit card
companies can offer a buffer by assuming the losses while the fraudulent
purchase is investigated. “If your debit card gets used fraudulently,
you’re out real money from a real account,” says Matt Schulz, an analyst
for CreditCards.com. “That may not get replaced for two weeks and in the
interim you may not have that money to make a rent payment.”

Yet consumers have preferred to use debit over credit, with some young
consumers shunning credit cards completely in order to minimize their
chances of piling on more debt. Now, at least some consumers may be
changing their ways.

Of those who had credit cards, one in eight consumers said they are more
likely to shop with credit cards this holiday season in the wake of the
recent data breaches, according to a survey released Monday by
CreditCards.com. Nearly half of people surveyed, or 48 percent, said they
would cut their chances of fraud altogether by paying in cash.

Consumers were divided on how they would treat the retailers that have
recent breaches. Forty-five percent of people with credit cards or debit
cards said they either definitely would not, or probably would not, shop at
retailers that have had a security breach. Forty-one percent of consumers
said they would probably still shop at those stores and 11 percent said
they definitely would.

Among the least worried consumers were women and higher earners. More than
half, 56 percent, of women said they would definitely or probably keep
going to those stores. So did 67 percent of consumers who make $75,000 or
more.

Cybersecurity has been generating more attention in recent weeks after
significant breaches exposed the information of millions of consumers. Even
President Obama called on the federal government last week to improve
credit card security in light of the recent breaches.

Still, not all breaches lead to fraudulent charges or identity theft. Many
banks are proactive about letting customers know when they’ve visited
retailers or shops that have been breached, often sending people new cards
proactively. The vulnerability of the breach will also depend on the type
of information exposed. The JPMorgan breach, for instance, did not involve
birth dates or Social Security numbers.

And the biggest issue this holiday season may not be whether consumers are
anxious about the purchase they’re making but if they are spending at all.
Flat wages and worries about the economy have kept spending down across
most retail categories, and it’s not clear when consumers might feel ready
to open their wallets again.

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