IDEAS home Printed from https://ideas.repec.org/p/fip/fedpwp/15-42.html
   My bibliography  Save this paper

Out of sight, out of mind: consumer reaction to news on data breaches and identity theft

Author

Listed:
  • Mikhed, Vyacheslav

    (Federal Reserve Bank of Philadelphia)

  • Vogan, Michael

    (Federal Reserve Bank of Philadelphia)

Abstract

We use the 2012 South Carolina Department of Revenue data breach to study how data breaches and news coverage about them affect consumers’ take-up of fraud protections. In this instance, we find that a remarkably large share of consumers who were directly affected by the breach acquired fraud protection services immediately after the breach. In contrast, the response of consumers who were not directly exposed to the breach, but who were exposed to news about it, was negligible. Even among consumers directly exposed to the data breach, the incremental effect of additional news about the breach was small. We conclude that, in this instance, consumers primarily responded to clear and direct evidence of their own exposure to a breach. In the absence of a clear indication of their direct exposure, consumers did not appear to revise their beliefs about future expected losses associated with data breaches.

Suggested Citation

  • Mikhed, Vyacheslav & Vogan, Michael, 2015. "Out of sight, out of mind: consumer reaction to news on data breaches and identity theft," Working Papers 15-42, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:15-42
    as

    Download full text from publisher

    File URL: https://www.philadelphiafed.org/-/media/research-and-data/publications/working-papers/2015/wp15-42.pdf?la=en
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    as
    1. David B. Gross, 2002. "An Empirical Analysis of Personal Bankruptcy and Delinquency," Review of Financial Studies, Society for Financial Studies, vol. 15(1), pages 319-347, March.
    2. Kosse, Anneke, 2013. "Do newspaper articles on card fraud affect debit card usage?," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5382-5391.
    3. Stavins, Joanna, 2013. "Security of retail payments: the new strategic objective," Public Policy Discussion Paper 13-9, Federal Reserve Bank of Boston.
    4. Justin Gallagher, 2014. "Learning about an Infrequent Event: Evidence from Flood Insurance Take-Up in the United States," American Economic Journal: Applied Economics, American Economic Association, vol. 6(3), pages 206-233, July.
    5. Donghoon Lee & Wilbert Van der Klaauw, 2010. "An introduction to the FRBNY Consumer Credit Panel," Staff Reports 479, Federal Reserve Bank of New York.
    6. Shumway, Tyler, 2001. "Forecasting Bankruptcy More Accurately: A Simple Hazard Model," The Journal of Business, University of Chicago Press, vol. 74(1), pages 101-124, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Identity theft; Fraud alert; Data breach; Consumer protection; Credit report;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedpwp:15-42. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Beth Paul). General contact details of provider: http://edirc.repec.org/data/frbphus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.