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Scam alert: Cyber crime costs consumers $10 billion a year

What's Congress going to do about it?

Created date

April 24th, 2015

If you have a credit or debit card, chances are you have received a telephone call, letter, or email informing you that your data may have been compromised. Sometimes, it’s just an alert. Other times, the breach is nefarious enough to warrant issuing you a new card and account number. 

Not long ago, making purchases from brick and mortar stores made you less susceptible to having your information hacked. Those days are gone. In today’s digital world, the mere act of shopping puts you at risk for having your personal information intercepted and used by unauthorized parties. 

“If sensitive information falls into the wrong hands, the results can be devastating,” says Jessica Rich, director of the Bureau of Consumer Protection at the Federal Trade Commission. 

In March, the U.S. Congressional Subcommittee on Commerce, Manufacturing, and Trade heard testimony about data breaches. Their goal is a single, federal standard on data security and breach notification. The Data Security Breach Notification Act would help protect sensitive consumer information from the consequences of harmful cyber attacks. Entities that collect and maintain personal information would be required to secure that information and provide notice in the event of a security breach.

Legislators weigh in

“It’s important that we do something now,” says full committee vice chairman Marsha Blackburn (R-TN). “2014 was dubbed the year of the breach. The issue is getting out of control, and we need to take steps to put the guidance in place so individuals will know they have the tools in place to protect their data and their presence online.”

“Data breaches are a real and growing threat,” says subcommittee chairman Michael C. Burgess, M.D. (R-TX).  “Many Americans have already suffered the consequences of a cyber crime and nearly every consumer’s personal information is at risk in this digital age. Conservative estimates put cyber crime costs to consumers at $100 billion annually. And cyber crime is estimated to cost the U.S. economy 508,000 jobs each year.”

“Cyber crime is a crisis for American consumers and businesses,” says Rep. Peter Welch (D-VT). “Rome is burning while Congress has been asleep at the switch. This legislation is an important first step toward protecting Americans’ sensitive financial information from cyber criminals.”

While there is overwhelming agreement that it’s time to rein in cyber crime and protect American consumers from the fallout, many believe this particular legislation falls far short of what is needed. In fact, during the hearing, only one witness out of seven expressed support for the bill as it’s currently drafted. 

“This bill is better for consumers than current law,” says Jon Leibovitz, a former chairman of the Federal Trade Commission and current co-chairman of the 21st Century Privacy Coalition, an advocacy group funded by large telecommunications and cable firms. 

Whether or not this particular bill is the answer, the fact remains that cyber crime is threatening American consumers and something needs to be done about it.