Last night, (1/15) some 24 million accounts from the online shoe store Zappos were exposed after a mass hack. However, the company reported that it would be unlikely for the hackers to take the time to unlock all the password encryptions. Fortuneately, however, the hackers did not access the database that stores customer credit card information.
Although this hacker-scare isn't serious in comparison to other hacking events cited in the article, like the Sony hack which led to 77 million stolen credit cards, this incident acts as a clear reminder of the dangers of stored information. With all that information stored in a single database, the ramifications of a leak in security are immense. In fact the article states that "despite recent ramped-up efforts to protect against unauthorized entry into companies' systems, hacks have only increased in number and in scale."
The article also mentioned the negative PR affects of hacking incidents. Imagine working hard to gradually build trust and respect among customers, only to have your business' reputation marred by a single incident. In this way, security-breach incidents can destroy a company's image, effectively reducing business and, in severe cases, driving a business to extinction. Once an event like a hacking incident is announced to the public, it's impossible to take back. And because hacking events aren't common, customers are more likely to remember the few incidents they are aware of. (The reputation effect is comparable to that of the Wendy's finger chili incident.)
http://money.cnn.com/2012/01/16/technology/zappos_hack/index.htm?iid=HP_LN
1 comment:
Also, Zappos did ask its customers to reset their account passwords and personal information, a request which must have been additionally irksome for the already worried owners of those 24 million hacked accounts.
Keaton is definitely right about the reputation effect. It's exactly like in unSpun, when the authors taught the concept that humans "tend to overgeneralize from vivid, dramatic single examples." All these positive BP commercials we see are an excellent example of how companies try to rebuild their PR after terrible incidents (such as the BP oil spill). The Wendy's example is exceptional as well. However, with newer scandals and accidents every month, I think that many people also tend to forget some of those past mistakes made by companies, which may allow for Zappos to maintain a healthy online user base if it can withstand the criticism and skepticism in the weeks ahead.
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