With an Increase in Online Shopping, Prepare for an Increase in Data Breaches
If you don’t think that online shopping will soon become as common as shopping at a brick-and-mortar store, you haven't been paying attention. E-commerce has grown to the point where just about every business has a website and something you can purchase from them online. If your store doesn’t have an online presence, you are missing out on a huge income stream.
According to First Data, e-commerce transactions grew at a pace more than six times faster than brick-and-mortar stores during the 2017 holiday season. Sales on Cyber Monday alone set a new record with a reported $6.59 billion in sales.
My wife and I did about 95% of our Christmas shopping online. I even saw that you could buy your Christmas tree online. What? Yes, you read that right. And no, I didn’t make that purchase.
Where there’s money, there’s crime
Now for the bad news: criminals go where the money is. Based on current sales figures, that money is now in e-commerce. Shopping online can be convenient, but it comes with its own pitfalls. According to a study performed by Ponemon Institute, the average cost of a data breach is $3.62 million.
Imagine that a customer’s credit card number is stolen. Not only can thieves use it to make additional purchases online, they can also make physical purchases. Tyler Atwell at CUInsight writes, "After that some are able to manufacture a genuine-looking credit card from blanks and program the magnetic strips to effectively create a replica of the card that you still have in your possession. With that card and some cool nerves, they are able to use that duplicate to buy merchandise at any store."
Theft of information through data breaches can also run deeper than simply using a credit card number. Criminals on the dark web are willing to purchase information from thieves and will likely use it to apply for credit or make purchases.
“Buyers are currently willing to pay just $1 for a Social Security number, which is the same amount they’ll pay for user and password information to Brazzers, a pornographic website,” reports Don Reisinger for Fortune. “Access to someone’s PayPal account is the most valuable asset at up to $80, depending on the available balance.”
Companies and consumers need to be aware
E-commerce sites and the consumers who use them need to start being more proactive, as cyber criminals seem to be staying one step ahead of security features. According to EyeOnPass CEO Daniel Söderberg, the complexity of data breaches is only growing, but even little things a consumer does (such as knowing best practices for passwords), can make a difference to their protection.
“Once a password is stolen, you should never use it again. You should consider that password very dangerous to use again as it is in the hands of hackers who can easily use it against you," says Söderberg. "Imagine having your house broken into and someone stealing the key to your front door. Would you use the same locks going forward?”
While customers must do everything they can to protect their private information, companies also must play a major role. If anything, they should be aware of the many lawsuits that are now being filed by customers. If a company doesn’t care about its customers’ data, they should at least care about the potential legal costs associated with a data breach.
“Courts are making it easier for victims to sue companies that suffer a data breach,” writes the Wall Street Journal's Adam Janofsky. “And regulators are probing these firms more aggressively with the aim of levying large fines.”
Other Articles From AllBusiness.com:
- 25 Frequently Asked Questions on Starting a Business
- 50 Questions Angel Investors Will Ask Entrepreneurs
- How to Create A Great Investor Pitch Deck for Startups Seeking Financing
- 17 Key Lessons for Entrepreneurs Starting A Business
What your company can do
I’m not a cyber security expert and I won’t pretend to be, but there are many great articles online that can give you advice on steps to take to protect customer information. Here are some of the most common:
- Keep only the information necessary: Law requires certain records to be kept for a certain period. Once that time elapses, archive or destroy the content.
- Secure your site: If you don’t already have a SSL certificate, get one.
- Encrypt data: In addition to securing your site, make sure you encrypt transactions.
- Familiarize yourself with, and follow, the Payment Card Industry Data Security Standard.
- Consult with an expert: Chances are you aren’t a cyber security expert either. That’s why you should consult with a reputable company that deals in such matters. They can provide you with a website audit as well as recommendations on how to protect your customers’ data.
Summing it up
Online sales are increasingly outpacing brick-and-mortar stores. Don’t get me wrong—your local mall will not simply vanish because of online sales. Even Amazon is opening brick-and-mortar stores, despite the fact the online giant is killing it in the e-commerce space.
I’m also not recommending you get out of the e-commerce space because of the potential downfalls. There is great money in e-commerce and I advise all businesses to take advantage of that.
My point is that just about everyone is making online purchases, and many of us are making the majority of our purchases online. With that much money flowing through the web, cyber criminals are looking to get a piece of it.
If you are running an online store or thinking of starting one for your brick-and-mortar shop, make sure to stay ahead of the curve. One data breach could cost you everything.
