Digital fraud is a growing threat that can have devastating effects. Beyond the financial cost, it can do long-term damage to an organization’s reputation and legal standing.
Paying the price of cybercrime
In 2020, the FBI’s Internet Crime Complaint Center (IC3) reported that cybercrime resulted in losses of $4.2 billion for U.S. businesses and individuals.
In 2017, the U.S. credit bureau Equifax suffered a data breach that exposed the personal information of 147 million people. Equifax agreed a settlement of up to $700 million with the authorities. This was to cover consumer restitution, civil penalties, and other costs.
Looking forward, a report by Juniper Research estimates cumulative losses from online payment fraud will exceed $362 billion between 2023 and 2028.
Trust and reputation: Hard to gain, easy to lose
Financial losses are painful, but reputational damage can be longer-lasting. When public perception turns negative, customers who no longer trust a company can take their business elsewhere.
The US telecoms giant AT&T suffered two major data breaches in 2024. The first, in March, resulted in 73 million customer records appearing on the dark web. The second, revealed in July, compromised the call records of almost every AT&T customer, a total of around 110 million people.
The Moody’s rating agency called the breach a “credit negative” that raised “serious questions” about AT&T’s cyber risk management and could lead to “customer defections as a result of customers’ perceiving their private data being more vulnerable at AT&T relative to wireless competitors.” Meanwhile, the company is also facing a number of class-action lawsuits for failing to safeguard customers’ PII.
Legal repercussions
Failure to protect customer data adequately can result in hefty fines and lawsuits.
Regulations like the General Data Protection Regulation (GDPR) in Europe impose strict penalties for data breaches. For example, British Airways was fined £20 million for a data breach in 2018.
Organizations must invest in compliance measures to meet regulatory requirements and avoid future breaches. This includes enhancing cybersecurity infrastructure, conducting regular audits, and implementing training programs for employees.
Cybersecurity: A smart investment
Proactively investing in cybersecurity can save organizations from devastating losses.
Although advanced security measures aren’t cheap, the costs of dealing with a data breach can be far greater.
Vigilance is imperative
The impacts of digital fraud can be costly and far-reaching. They can seriously damage an organization’s financial stability, brand reputation, and legal standing.
A proactive cybersecurity strategy is the best defense against these threats.