Consumer Law

Study Finds Data Breach Laws Have Only Marginal Effect on Identity Theft

By Jeff Sovern

Sasha Romanosky, Rahul Telang, and Alessandro Acquisti, all of Carnegie Mellon, have co-authored Do Data Breach Disclosure Laws Reduce Identity Theft?  Here's the abstract:

Identity theft resulted in corporate and consumer losses of $56 billion dollars in 2005, with about 30% of known identity thefts caused by corporate data breaches. Many US states have responded by adopting data breach disclosure laws that require firms to notify consumers if their personal information has been lost or stolen. While the laws are expected to reduce identity theft, their full effects have yet to be empirically measured. We use panel from the US Federal Trade Commission with state and time fixed effects regression to estimate the impact of data breach disclosure laws on identity theft from 2002 to 2007. We find that adoption of data breach disclosure laws have a marginal effect on the incidences of identity thefts and reduce the rate by just under 2%, on average. While this effect is marginal, reducing identity theft is only one means by which these laws can be evaluated: we appreciate that they may have other benefits such as reducing the average victim's losses or improving a firm's security and operational practices.

Full post as published by CL&P Blog on March 22, 2009 (boomark / email).