Two-Thirds of Shoppers Don't Trust Retailers After Data Breaches

NEW YORK (TheStreet) -- Call it the "Target effect."

After consumers got wind of the data security breach that left customer credit card numbers open to identity thieves last year, many stopped using their credit and debt cards while shopping at the national big box retailer.

For Target, the ramifications were swift, as Standard & Poor's recently cut Target's investment-grade rating to A from A+. "We expect the data breach to have a somewhat lingering effect on customer traffic at least through the first half of fiscal 2014," S&P said in March. "We expect incremental expenses, penalties and litigations to emerge in fiscal 2014. We believe these expenses could be significant."

It's not fair to blame Target only. Giant retailers including Michaels Stores and Neiman Marcus also suffered big data breaches, and unsurprisingly U.S. payment cardholders are increasingly reluctant to trust retailers with their credit cards.

According to American Consumer Credit Counseling, a Boston debt counseling nonprofit service, 64% of U.S. adults "do not trust" major retailers with their payment cards, and 52% of consumers surveyed say they have already been affected by some form of payment card fraud.

That is turning the payment industry on its ears. In an era when plastic rules the shopping aisles, the ACCC says 42% of Americans are now paying for retail goods with either cash or a check.

It's up to retailers to regain the trust of shoppers by securing their payment cards, but it's an uphill fight.

If you liked this article you might like

Toys 'R' Us Store Employees Set for Higher Wages Despite Bankruptcy

Target Expands Next-Day Delivery Program

Target Is Taking on the Big Guys

Cramer: Dominoes Are in Play Today