I think by now most Americans have seen the commercials about identity theft. They are funny and quite entertaining. However, identity theft and data breaches are no laughing matter. It can be financially devastating, costing you your customer base. Could your employees be the culprits of such financial disaster?
Employment related identity theft has surfaced as the most prevalent area of identity theft in America. “Workplace identity thefts account for an estimated 70 percent of identity crimes in the US,” according to a study by Michigan State University. It all starts with the theft of personal data by an employee. Instead of stealing merchandise from their employer, many employees steal data and get money.
Over the past few years, as concerns about identity theft grew, Congress stepped in and passed laws like the Fair and Accurate Credit Transactions Act (FACTA) and the Gramm Leach Bliley (GLB) Act. FACTA and the GLB Safeguards Rule are both enforced by the FTC, and the FTC means business. Just as identity theft is no laughing matter, neither are the federal laws. In fact, last year a Florida-based company was fined $12 million after a breach. The reason: “They did not train their employees on handling personal information.” What would that do to your bottom line? Tom Hudson, leading industry attorney, said, “I would not be surprised if as many as 80 percent of dealerships in America are not compliant with federal privacy laws.”
What happens if you have a careless or corrupt employee who causes a breach of customer information? Possibly civil lawsuits, class action lawsuits, and fines by the FTC. What happens when hundreds of customers/employees find out that their personal information was breached?
According to “The Coming Pandemic,” an article by Michael Freidenberg as published in CIO Magazine, “If you experience a security breach, 20 percent of your affected customer base will no longer do business with you, 40 percent will consider ending the relationship and 5 percent will be hiring lawyers!”
Lawyers? Did you say lawyers?
That’s right, lawsuits filed after a data breach against companies by their customers and employees are on the rise. You would be kidding yourself if you believed that even your most loyal customer wouldn’t sue you if he or she has the opportunity. If they can, they will. The security of your data is vitally important, so take it seriously. If you have a data breach in your dealership, you can be sure that your customers will take it seriously and perhaps never set foot in your dealership again.
What can you do?
Train your employees and have them sign confidentiality statements. Training your employees on handling personal customer information lets them know that you care about them and your customers. Your employees will know that you will not tolerate carelessness or corruptness when it comes to protecting customer information. To further protect your customers, consider offering identity theft protection in the F&I department. It could serve the dual purpose of providing an additional revenue stream and mitigating your customers’ damages if you have a data breach. It could be a win-win situation.
You should also let your customers know that your employees have been trained and that you are doing everything humanly possibly to protect their good name and credit. Don’t be afraid to bring up the subject. It will give them peace of mind.
If you want to keep your customers coming back and your referrals coming in, take steps to limit the possibility of a breach. Don’t let a data breach cost you your customer base. We all can agree it is easier to keep customers than find new customers. Remember, security first!
Vol 4, Issue 4
