The Impact of Recent Breaches on Consumer Preferences and Behaviors
If and how high-profile breaches have shifted the preferences and behaviors of U.S. consumers
In the wake of numerous high-profile data breaches and privacy incidents, consumers are more aware and concerned than ever about the security of their identity information and what companies are doing to keep it safe. This creates new requirements related to identity assurance, generating both challenges and opportunities for businesses.
This year, identity verification solutions provider IDology initiated a study to uncover if and how high-profile breaches have shifted the preferences and behaviors of U.S. consumers. The results show a strong need for bi-directional trust between consumers and businesses: consumers must trust that businesses will protect them and businesses must trust that they’re dealing with legitimate consumers.
Christina Luttrell, senior vice president of operations including product management, client solutions and marketing shares the study’s key findings:
Q: Have recent breaches increased consumer concern?
A: Yes, according to the data, high profile breaches and stories related to privacy and personal experiences have fundamentally changed the collective American anxiety related to the safety of personal information. The study shows that 57 percent of American consumers are more concerned about the security of their personal information than compared to a year ago. Furthermore, 83 percent express moderate to extreme concern that their personal information could be used by a criminal to open a fraudulent account. Interestingly this extends to mobile devices as well – 76 percent of consumers have moderate to extreme unease that their personal information will be compromised from their mobile phones.
This higher level of distress manifests itself in consumer preferences. For example, security is found to be more important than speed during the account opening process. Consumer desire for, and perception of, identity verification and security processes have reached a turning point. Consumers want assurance that when they open or access an account, the process is safe and their data is protected.
Q: Do consumers prefer certain methods of identity verification and authentication?
A: Biometrics, Knowledge Based Authentication (KBA) questions and one-time passcodes are the top three digital identification methods American consumers believe to be the most secure. This is primarily due to familiarity and comfort level with these methods, given that they are also the most widely used. However, consumers don’t appear to be as familiar with the difference between the methods. For example, KBA questions can be either static or dynamic. While static KBA questions are selected by the consumer and stored by a company for use later, dynamic KBA questions can be generated from credit bureau or demographic data such as, “how much is your monthly mortgage payment?” There are also significant differences and preferences between the data sources and thus types of questions that are served up. By a margin of two-to-one, consumers prefer demographic questions compared to credit based questions which tend to be harder to answer.
Identity verification isn’t a one size fits all and in reality, there are pros and cons for each method, as well as ideal scenarios for when one method makes sense over another. Companies should have an array of verification and authentication tools at their disposal so they can determine the best method for the interaction.
Q: Are consumers placing the same level of responsibility for protecting their information on companies as they do on themselves?
A: An interesting gap in trust has emerged. Sixty-seven percent of consumers place a higher level of responsibility on companies to protect their personal information, yet they don’t have much confidence in businesses, government agencies or credit bureaus to actually do it. For example, 20 percent reported to have no confidence in trusting businesses to protect their data.
Closing this gap requires the right formula of low friction, or frictionless, customer experiences and messaging about the importance a business places on protecting customer data. Sharing the steps taken to ensure interactions are secure is one way businesses can put the consumer at ease and give them confidence that their data is safe.
Q: With all the concern people express about the security of their information, are they doing anything different to safeguard their identities?
A: Unfortunately, consumers aren’t doing enough. In fact, the data indicates a great deal of room for improvement. Among consumers who have been notified that their personal data was comprised, 20 percent took no action. Only 13 percent placed a freeze on their credit and only 19 percent enabled 2FA (two of the most effective steps to take after a breach). Even worse, only 40 percent took the most basic recommended action after a breach and changed their passwords. One reason could be that consumers don’t know what they need to do, as different types of breaches require different actions and countermeasures be taken to stay secure.
On top of this, most consumers fail to follow best practices for passwords. When asked how often they change their passwords, 76 percent said once a year or less, while one in six admitted they never change their passwords unless they’re forced. To make matters worse, 44 percent remember passwords by writing them down and only 14 percent use a password manager. Consumers can and should do more to protect their data. Educating and promoting safer credentialing methods is everyone’s job.
Q: What factors are behind increased concern around mobile device security?
A: Mobile devices have become the center of our lives – from commerce to banking and establishing credentials - so of course, it’s a rising fraud vector. Smartphones are increasingly used as identity verification and authentication tokens and 42 percent consider their mobile phone number to be an important part of their identity. One of the most interesting findings of the study is the number of mobile change events that occur and their impact on mobile fraud. Our data showed more than half of consumers experience some sort of mobile change event, whether they purchased a new phone, changed providers or had their device lost or stolen. These change events naturally open the door for fraud. Mitigating this risk should be a top priority for companies. Authentication that leverages a direct connection to mobile carriers to authenticate consumers and their devices based on real-time data is the most effective way to reduce risk.
To view the full study, visit https://www.idology.com/blog/a-new-era-in-identity-verification-privacy-and-trust/.