How Privacy Flaws Affect Consumer Perception

Abstract

We examine how consumers perceive publicized instances of privacy flaws and private information data breaches.Using three real-world privacy breach incidents, we study how these flaws affected consumers' future purchasing behavior and perspective on a company's trustworthiness. We investigate whether despite a lack of widespread privacy enhancing technology (PET) usage, consumers are taking some basic security precautions when making purchasing decisions. We survey 600participants on three well-known privacy breaches. Our results show that, in general, consumers are less likely to purchase products that had experienced some form of privacy breach.We find evidence of a slight bias toward giving products the consumers owned themselves more leeway, as suggested by the endowment effect hypothesis.