Customer Data and Legal Liability
Businesses have a lot of responsibilities. Running a business means you must provide customers with an excellent product, pay employees on time and pay off your debts. However, there are other responsibilities you may not think of as often that are also very important. This includes protecting the private information of customers that is stored on your servers. Not doing so can have harsh consequences for your company.
With that in mind, below are five things companies should know about customer data and legal liability.
1. You Will Be Hacked
Being hacked as a business is almost a certainty in the current climate. It really doesn’t matter if you’re a large national chain or a tiny small business. According to a news report, nine out of ten companies are hacked every single year. It’s not really a question of if your business will be hacked. It’s a question of when. You have to be preemptive about protecting customer data or it will be stolen.
2. Hacking Is a Billion Dollar Industry
The reason why criminals hack companies in most cases is to obtain customer data such as names, addresses, credit card numbers and more. They don’t do this for fun. They do it produce a profit. Such information is often sold on the black market with the use of bitcoins, a digital form of currency that is practically untraceable. The information is then used to steal those customers’ identities so money can be spent and things bought under their names. According to the US Justice Department, identity theft cost Americans $15.5 billion in 2014.
3. You Can Be Held Liable
You may think hacking is a crime only the hacker will be held responsible for. However, this isn’t always the case. Companies are often held responsible through lawsuits from customers victimized by such hackings. Many of the biggest companies have been sued over customer data hacking and settled for millions. If you have experienced a hack, you should probably contact a lawyer with experience in that area of the law.
4. You Have the Duty to Protect Customer Data
You must take preemptive steps to ensure that customer data remains protected while on your servers. If it’s found out that data was misused, you may have committed a crime. There are many laws that mandate exactly how and when customer data can be used and exchanged.
5. You Will Be Hacked More than Once
Sadly, if you have already been hacked, the worst of it may not even be over. According to statistics, you are quite likely to be hacked again in the near future.
Companies must take action to secure customer data in their networks. It’s one of the responsibilities of being a business in the 21st century. If you don’t, that data will certainly be stolen. If that occurs, you could be sued for millions.
If you haven't explored cyber liability insurance and are interested in discussing your coverage with an insurance expert, contact us here and we can have someone from our team get back to you.