Consumers Wary About Identity Theft May Switch to Cash

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American consumers are rattled and concerned about the safety of their personal identity and information following several recent security breaches at popular retailers.  Yet despite their concerns, many consumers aren't taking steps to ensure their data is more secure, according to a new Associated Press–GfK Poll.  The poll finds a striking contradiction: Americans say they fear becoming victims of theft after the breach that compromised 40 million credit and debit cards and personal information of up to 70 million customers. Yet they are apathetic to try to protect their data. cash

The poll offers insight into the effects big data breaches can have on consumer behavior. There have been worries that shoppers would dramatically change their habits since December, when Target announced the breach that could wind up being the largest in U.S. history. Weeks later, those concerns were elevated when luxury retailer Neiman Marcus disclosed that it too was the victim of a breach that may have compromised 1.1 million debit and credit cards.

WILL SHOPPERS CHANGE HOW THEY PAY FOR PURCHASES?

In the survey, nearly half of Americans say they are extremely concerned about their personal data when shopping in stores since the breach. Fifty-eight percent say they have deep worries when spending online, while 62% are very concerned when they buy on their mobile phones.

But just 37% have tried to use cash for purchases rather than pay with plastic in response to data thefts like the one at Target, while only 41% have checked their credit reports. And even fewer have changed their online passwords at retailers’ websites, requested new credit or debit card numbers from their bank or signed up for a credit monitoring service.

Security experts say the results show that Americans have come to expect that security theft is a possibility when they use their credit or debit cards or provide retailers with phone numbers, emails and other personal information.  The results also show another expectation Americans have: While nearly 4 out of 10 say they have been victimized by personal data theft, most expect credit card companies, banks or retailers to take responsibility when that happens.

Among Americans who have been victims of personal data theft, 52% have checked their credit report, while 41% have tried to use more cash. Twenty-eight percent have signed up for a credit monitoring service.

SWITCHING TO CASH — PROS & CONS

Trying to use cash more often is a difficult adjustment for a population that has become accustomed to the convenience of pulling out a little piece of plastic for purchases as small as a Diet Coke.  Some consumers, however, advocate that using cash allows them more budgetary control; purchases can only be made if cash is on-hand.  Others feel that using cash has the added side benefit of eliminating the ability of merchants to collect information about purchases.

Financial advisers and consumer advocates say there are drawbacks to an all-cash existence beyond the nuisance and expense of running to the A.T.M.  For one thing, cash is not an option with online purchases.  Financial advisers also point out that it is important for consumers to build up a credit history through the responsible use of credit cards.

Still, despite the talk, no hard data exists to indicate whether significantly more consumers actually are using cash.

[Source:  D'Innocenzio, Diane.  "AP-GfK poll: Breaches Not Changing People's Habits."  GfK/KnowledgePanel.  27 Jan. 2014.  Web.  7 Feb. 2014.]

February 17, 2014 Newsroom Tags: