Study reveals consumers' data worries.

Consumers, inundated with bad news each day about data breaches, say the government isn't doing enough to protect them, according to a Gartner Inc. study.

In an extensive study on consumer attitudes toward identity theft, Gartner found that about half those polled either were not aware they were entitled to a free credit report or considered them "not effective" in fighting ID theft. In fact, only 14 percent of consumers who were aware of their right to a congressionally mandated free credit report said the reports were very effective in the fight against ID theft. The research found that 37 percent of all U.S. adults had not even heard of their right to a free report. Of those who had, 23 percent said the free report had little or no effect in their personal effort to prevent ID theft.

The survey also found that one-third of consumers are "very concerned" about becoming victims of identity theft, and nearly half said they are changing their online activities as a result.

Gartner researcher Avivah Litan, who led the study, said the survey results also suggested that more than 1 million consumers have been tricked into divulging their personal information via phishing schemes, with financial losses totaling nearly $1 billion. More than 80 percent of consumers say they are reluctant to trust e-mail communications from any company as a result of the confusion caused by phishing.

Based on the survey data, Litan estimated that almost 73 million of the 148 million U.S. adults now online have received at least one phishing e-mail, up 28 percent in the past year. About two-thirds of those who said they'd received such e-mail said they'd been "phished" in the prior month. Using those surveyed as a sample, Litan estimated that 1.2 million Internet users believe they have divulged their personal information to criminals, who have stolen $929 million from those consumers' accounts in the past 12 months. According to Litan, those figures are probably low.

The research also examined spyware, revealing that 46 percent of all consumers say they have found some kind of malicious software on their desktop.

The study of 5,000 U.S. adults--conducted in May, during a series of major data breach announcements by the likes of ChoicePoint, LexisNexis, and Bank of America--revealed that identity anxiety is hampering e-commerce growth. Forty-two percent of respondents said worries about phishing, data losses, and spyware affected their online shopping habits. Such fears result in people shopping less online, Litan said.

"Consumers are really getting scared, and they don't think their government is protecting them," she told MSNBC.com. This year's study was conducted before the announcement of recent data loss incidents affecting millions of consumers by CitiCorp and MasterCard. "I think it would be even worse now," she said.

Indeed, 2005 is shaping up to be the year of the data breach. Collectively, experts estimate that through June 2005, nearly 50 million accounts had been exposed to the risk of identity fraud since the beginning of the year, a significant increase from last year.

The Privacy Rights Clearinghouse says about 10 million people's personal data have been lost or stolen since February.

In the mother of all security breaches--at least this year--40 million credit cards were exposed when an "unauthorized individual" infiltrated the computer network of CardSystems Solutions, a third-party payment processor. MasterCard International revealed that the hacker may have stolen up to 40 million credit card numbers. All brands of credit cards were exposed in the attack, but about 14 million of the 40 million accounts exposed were MasterCard accounts, the firm said.

CardSystems performs transactions for more than 100,000 small companies with more than $15 billion in Visa, MasterCard, American Express, and Discover transactions processed annually.

"Data breaches are now at pandemic proportions," said Rob Douglas, a security expert who operates Privacy-Today.com. "The level of data breaches is not just a national embarrassment, it is a national emergency and Congress needs to act accordingly."