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FTSE heads for weekly rise but Experian drops on US data breach

Discussion in 'Market News' started by Lily, Oct 7, 2015.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Credit information group falls more than 4% as analysts weigh up implications

    Leading shares are moving higher ahead of the US jobs data, with banks boosted by news of a deadline being set for consumers to claim for mis-sold payment protection insurance.

    But Experian has dropped more than 4%, down 49p at £10.26, after news of a data breach in the US affecting 15m people who applied for service with T-Mobile. Analysts at Barclays said:

    In the near term, the greatest hit to Experian is the damage to its reputation and its effort to establish the “Experian.com” brand in the direct to consumer credit monitoring space. Unlike [recent data breach victim] Target (a retailer), Experian’s business is that of handling data, which makes this incident particularly embarrassing.

    Undoubtedly a breach of this magnitude is a major setback, especially to a company that takes data security very seriously. T-mobile is obviously reviewing its relationship with Experian. In itself the loss of one client is fairly immaterial (a few million $ in our view) but if it triggers other account reviews, it could become more significant.

    Data breaches/cyber attacks are becoming increasingly commonplace. Though this one impacts Experian we don’t sense Experian’s competitors will be singing from the rooftops as any large data play is at risk from hackers and ID theft.

    Whilst unfortunate we don’t think it will trigger a mass exodus of clients, although that will depend on the robustness of Experian’s response and the steps it takes to shore up security. It will of course make Experian’s task of rehabilitating its consumer business much more difficult.

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