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Small Merchants Must Take Data Protection Seriously Says Bank Exec and Survey

Data breaches at big companies are big news, but you’re unlikely to hear about how common they are at the small businesses in your neighborhood. In fact, 44% of small businesses report being a victim of a data breach, according to a 2017 Bank of America Merchant Services survey of small businesses and consumers. And while data breaches may be bad for the big guys, they could be downright catastrophic for a small business that lacks the resources to respond to the breach and repair its reputation.   Despite the risk, many small businesses are behind the curve when it comes to defense against fraud. Only 33% of small businesses reported they had purchased security software, and only 25% believed they were in compliance with the Payment Card Industry’s Data Security Standards (PCI Data Security Standards), which ensure that a business accepts, processes and stores credit card information as securely as possible. Nearly one in six admitted to having done nothing to protect their data.   The financial and reputational setbacks from a breach can be extensive—and some businesses may not survive the blow. Here’s a look at some of the costs of a breach, along with what small businesses can do to prevent one.   Financial and reputational costs Among the small businesses Bank of America Merchant Services surveyed, 31% that experienced a customer data breach in the last two years spent more than $50,000 to resolve the issue. This cost includes fees paid to forensic investigators who determine the source of the breach, as well as legal counsel and public relations advisers to help repair reputational damage. Few small businesses are in a position to recover from a financial hit of that size.   What’s more, businesses that aren’t compliant with PCI Data Security Standards may face non-compliance fines, and may have to reimburse credit card companies for each compromised card the company must monitor or replace.   In addition to absorbing the direct costs of addressing a data breach, small businesses must contend with less tangible costs, such as lost business from wary customers. Consumers report that…

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