We are all aware that one of the biggest account takeover impacts is broken trust and major compliance violations. However, what kind of trust & compliance problems will companies and businesses be held responsible for because of this?
As a reminder, account takeover attacks are damaging businesses because of the implication that businesses aren’t protected enough. From the perspective of users, they wouldn’t want to deal with a business that can’t keep their account safe.
Meanwhile, laws that exist to protect customer data can become a trouble for businesses when an account takeover case lingers around them. Understanding both of these can help businesses to understand that ATO is not a problem that can be ignored.
Account Takeover Impact on Regulatory Compliance
Data protection laws exist for a reason. They are created to help individuals and their personal information stay protected, especially from account takeover ATO attacks. So, what kind of regulatory issues will companies face from account takeover impact?
Data Breaches
One of the biggest issues from account takeover ATO attacks is data breach. It isn’t just because of the damage that companies will face head-on. They will also need to prepare a follow-up response to comply with data protection laws.
Regarding the regulatory compliance, many data protection laws (like FTC, GDPR, and so on) enlist steps that companies can follow as a response to account takeover attacks:
- Secure the operations and fix vulnerabilities that may cause data breaches in the first place. Companies may work with experts to mobilize their breach response to prevent any additional data losses.
- Contact law enforcement specifically to deal with cybersecurity threats. Companies also need to notify appropriate parties who are maintaining the accounts to monitor for fraudulent activity.
- Report data breach during a specific timeframe. An example of this can be seen from GDPR. The law states that companies must report data breaches within 72 hours. Failing to meet this rule, harsher penalties may be given to them.
- Notify the victims about the data breach to help them minimize the damage. Companies can send a data breach letter to the affected customers. The letter must inform them of all information regarding the data breach and what actions need to be taken.
Financial Punishment
Companies and businesses may face punishment for failing to protect customer data. The amount of financial punishments is based on the law that they must comply with. For example, Europe’s GDPR fines are up to 4% of their global annual revenue.
Then, there is also Indonesia’s PDP (Pelindungan Data Pribadi) Law for any companies that are operating there. As written in Article 57, Sections 2 and 3, companies that maintain customer data will face warning notices and fines up to 2% of their annual revenue.
Legal and Operational Consequences
If these two didn’t give enough problems for businesses, they will also face legal repercussions from affected customers. Their personal information may be at risk of misuse, or their stolen account could potentially be used for criminal activities prohibited by law.
The reason is simple: businesses simply fail to meet their own terms and conditions, which include usage of personal information. This is why it’s important for users to read the Terms of Service (ToS) for future cases.
Employees can also sue their own employer over a data breach that compromises their personal information, too. This can cause headaches over the company’s and business’s daily operation.
Account Takeover Impact on Customer Trust
Keeping customer trust is one of the reasons why companies will spend so much for account takeover prevention. These impacts one ATO incident can cause will possess a heavy toll on businesses for an indefinite time:
Erosion of Trust
Ensuring a customer’s personal information is not leaked is a promise every company must keep. Having an account takeover case just means they break that promise, which, in turn, erodes customer trust.
No longer trusting companies, customers lose their confidence that their data is safe. They may hesitate to continue doing business with the company or, worse, completely stop and move to other trusted companies.
Loss of Loyalty
As a company that has a service that requires continuous usage, keeping customer loyalty is a must. Their strategy to keep the business afloat is to minimize churn rate (the percentage of customers who stop using the service) as much as possible.
However, should an account takeover incident happen in the service, customer loyalty may be at stake. Without strong customer loyalty, any business may not be able to keep running for much longer.
Brand and Reputation Damage
In the era where social media are very accessible, words can be easily spread further to global communities. If an account takeover attacks companies and businesses, they will definitely face bad publicity, which can result in:
- Damaged brand and image. Not only does this impact businesses from keeping customer trust, but it also damages the perception of the brand and image from stakeholders and investors.
- Harder for businesses to gain and attract new customers. New customers who usually search for reviews online can easily know about the news, which can potentially scare them away.
- Harder for businesses to recover from losses. Recovering from last period’s losses is still easier because companies still have customer trust. But if that trust erodes, this can turn out to be a difficult situation for them.
The Consequences of Inaction from Account Takeover Impact
After all of these explanations, there is yet a move from companies to deal with account takeover. What would happen to them as a consequence of this inaction?
- Harsher penalties and fines from data protection law. As explained above, there’s a timeframe companies need to take action before it’s too late.
- More severe backlash from customers and the public. The more bad publicity stays around the internet, the harder it is for businesses to recover.
- Bigger financial losses from more customers leaving out of frustration. Should they insist on not doing any action, this can cause them to go bankrupt.
In conclusion, it is crucial for companies and businesses to follow regulatory laws and keep customer trust. However, it may sound easier said than done, given how many methods of ATO attacks are out there.
Thankfully, Keypaz is always available for businesses as an anti-account takeover protection tool. Its real-time AI-powered fraud detection can easily track and identify signs of ATO attacks, saving customers before it’s too late.
Keypaz also can reduce operational costs, improve user experience, and be scalable to follow business’s needs. Overall, a robust security infrastructure. Prevent account takeover impact in your business by using Keypaz now!