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Outrunning the Cybercrime Tsunami

March 25

In the wake of recent huge identity thefts (400,000 ChoicePoint victims being the most spectacular), ever-rising evidence of Internet-enabled fraud, and the increasingly obvious inability of the government to protect its citizens from this threat, comes a Financial Insights study documenting the steps consumers are taking to protect their own interests -- theyíre leaving.

Itís understandable why. According to studies completed in 2003 by Gartner Research and Harris Interactive, about seven million people were identity theft victims in the prior 12 months. That numberís got to be higher today. In addition, according to the Identity Theft Resource Center, the average victim now spends about 600 hours recovering from the crime compared to 175 hours three years ago.

Financial Insightsí survey (which was completed before the recent rash of high-profile identity database breaches) showed that nearly 6% of consumers have changed banks and about 18% have stopped shopping online due to ID theft concerns.

Consumers leave banks not just for actual data breaches, but if even they think the bank isnít operating adequate security systems. Thereís a market opportunity here for the entrepreneur who takes cybercrime seriously and invests in ways to address it. Unisys research shows that nearly half of consumers would be willing to switch their accounts to financial institutions they perceive as having strong theft detection and alert capabilities.

We also have a modest low-tech proposal to stem the thieving tide: banks, landlords, phone companies, credit card companies, insurance vendors -- stop demanding social security numbers at every turn then carelessly stuffing the data under your mattress.

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