Federal Trade Commission Commissioner Terrell McSweeny spoke today at a National Consumers League briefing on data breach and identity theft, where she discussed new research findings about the consumer impact of data breach and fraud.

Commissioner McSweeny was joined in Los Angeles by Joanne McNabb, Director of Privacy Education & Policy for the California Office of the Attorney General, for the second event of the National Consumers League’s #DataInsecurity Project, a cross-country series to raise awareness and push for action on consumer data security.

After a morning press event with several data security experts, the two officials joined NCL Vice President John Breyault to discuss a new study, released by NCL and Javelin Strategy & Research, which revealed disturbing trends for Los Angeles residents who have been affected by data breach and identity fraud. Nearly half of identity fraud victims are unaware where their information was compromised, while 61 percent of those who were also data breach victims reported that the breached information was used to commit fraud. The majority of data breaches affecting fraud victims involved a compromised retailer; fraud victims also reported that their information was used to make unauthorized purchases, either online (31 percent) or in person (39 percent). As a result, Los Angeles identity fraud victims are losing trust in retailers’ ability to keep their personal information secure and prevent it from being used to commit fraud.

“This report shows that fraud victims are calling for a decisive and coordinated response from both governments and the business community,” said Sally Greenberg, NCL executive director. “We thank Commissioner McSweeny and Director McNabb for joining us for this important discussion, and for their continued advocacy on behalf of consumers.”

#DataInsecurity Project Findings on Los Angeles Metropolitan Area Victims

The National Consumers League has released new research examining the impact of data breaches and identity fraud on consumer victims in four key regions nationwide, including the Los Angeles metropolitan area. According to the study, Americans are urgently calling out for government action on the growing threat posed by data breach and identity theft.

The study, conducted in partnership with Javelin Strategy & Research, shows that the impact of data breaches on consumers is indeed severe: 61 percent of data breach victims who also experienced identity theft reported that the breached information was used to commit the fraud against them. What’s more, nearly half of fraud victims -- 49 percent -- do not know where the information used to defraud them was compromised.

“Data insecurity is leading to real consumer harm, and this report confirms consumers are at a loss for where to turn in the face of this national problem,” said NCL’s Breyault. “As consumers share vast amounts of personal data with businesses, government and other entities, they expect their information to be protected from malicious hackers.”

The NCL/Javelin study, which includes surveys of fraud victims from Los Angeles, Miami, Chicago, and Minneapolis, along with additional Javelin research on national fraud trends, found that consumers are calling for government to take action. A mere 28 percent of victims surveyed said the government’s requirements for protecting healthcare and financial data were “sufficient.”

In Los Angeles, 35 percent of fraud victims said their data was used to make online purchases and 44 percent said their information was used to make purchases in-person. Among fraud victims in Los Angeles, 82 percent had received a notice of data breach previously which corresponds with reporting by victims in Miami (80 percent), but it is significantly higher than in Chicago (72 percent) and Minneapolis (66 percent).

“In this polarized political climate, it’s rare for Americans to express such agreement on any issue,” said Al Pascual, Javelin’s Senior Analyst of Fraud & Security. “But when it comes to the security of their personally identifiable information, the respondents said with one voice that the government must do more.”

According to the new study, the consequences of consumer fraud have a serious ripple effect: fraud victims report losing trust in the businesses where their data was compromised. For example, 59 percent of respondents whose data was breached at a retailer expressed “significantly decreased” trust in retailers who failed to protect their information. “When consumer trust drops, so do sales,” added Breyault, “This study is only the latest evidence for why the business community should be one of the most vocal advocates for protecting consumer data.”

About the National Consumers League

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.