Many consumers say businesses aren’t transparent enough about privacy risks

Breaches of personal information at an organization can have a major impact on its business, with consumers reporting ceasing to do business after a breach, notes a new report from the Economist Intelligence Unit (EIU).

In a global survey of regular Internet users, more than 32% said they would stop doing business with an organization if it experienced a breach, notes the report, titled “Privacy Uncovered.”

The report was sponsored by specialist insurer Beazley, which offers coverage for network security and privacy risks.

Only 26% of respondent said they think businesses are transparent enough in how they use customers’ personal data.

Sixty six percent of consumers also said they have sometimes not purchased a product or service because of concerns about the security of their information, the report adds.

“Consumers clearly feel very strongly about the perceived betrayal of trust that a data breach represents,” Paul Bantick, who heads Beazley’s Technology, Media and Business Services team in London, noted in a statement on the report.

“The ripple effects can be very wide – the EIU research also found that 46% of respondents that had suffered a data breach had advised friends and family to be careful of sharing data with the organisation,” he added.

That leads to a “multiplier effect in terms of the reputational damage that can be inflicted,” Bantick noted.

In addition, three quarters of those surveyed said they think regulation targeting misuse of personal information is too weak, the report says.

“Incentives for businesses to protect personal data were seen as inadequate by nearly 70% of respondents, with little variation among European, American and Asian respondents,” according to a statement on the report.

However, when asked how secure they felt their personal information was in the hands of a bank or financial institution, 41% said “very secure,” and 50% said “moderately secure.”

“We keep on hearing how banks in the U.S. and Europe have lost consumers’ trust,” Bantick said. “In some respects that may be the case, but when it comes to stewardship of private customer data the research suggests they still enjoy a far higher level of trust than other organisations.”

The report, which includes commentary on privacy issues from business leaders, is available on Beazley’s website.