Newswise — FAYETTEVILLE, Ark. – Viswanath Venkatesh, information systems researcher at the University of Arkansas, is available to comment on business responses to recent data security breaches at Equifax and Yahoo.
Venkatesh has studied the effect of various consumer compensation strategies used by companies that have experienced large-scale data breaches.
In 2015, Target Corp. agreed to pay $10 million in a class-action settlement stemming from a large data breach that compromised the financial information of millions of customers. Venkatesh studied the effect of two compensation strategies used by company in reaction to the December 2013 breach.
He found that compensation in the form of a 10-percent discount on purchases received favorable reactions. This compensation effectively restored perceptions of justice, which had positive effect on customer sentiment.
But another strategy – free credit monitoring for affected customers – received mixed reactions. Many customers disliked this strategy, regarding extended periods of free credit monitoring as overcompensation and risking the perception that there was more to the breach than the company communicated.