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How Data Breaches Affect Consumer Credit

Author

Listed:
  • Vyacheslav Mikhed
  • Michael Vogan

Abstract

We use the 2012 South Carolina Department of Revenue data breach as a natural experiment to study how data breaches and news coverage about them affect consumers? interactions with the credit market and their use of credit. We find that some consumers directly exposed to the breach protected themselves against potential losses from future fraudulent use of stolen information by monitoring their files and freezing access to their credit reports. However, these consumers continued their regular use of existing credit cards and did not switch lenders. The response of consumers exposed to the news about the breach only was negligible.

Suggested Citation

  • Vyacheslav Mikhed & Michael Vogan, 2017. "How Data Breaches Affect Consumer Credit," Working Papers 17-6, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:17-6
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    References listed on IDEAS

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    More about this item

    Keywords

    identity theft; fraud alert; data breach; consumer protection; credit reports;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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