Egghead crack won't break e-commerce

Summary:Analysts say savvy consumers already know of the risks of online shopping. So e-commerce won't be fried by the alleged poaching of 3.7 million credit cards.

The infiltration of Egghead.com's database is the largest of three major hacks to consumer sites in the past year. Yet few analysts believe the security breech will drive consumers off line.

"We don't think it'll effect things globally in any significant way," said Jupiter Research analyst Peter Marino.

"This is definitely a nightmare for credit card companies," said Gartner analyst Avivah Liton. "Consumers will get paranoid as a reaction. But, frankly, they don't need to."

The hacking of Egghead's database threatens to compromise as many as 3.7 million credit cards.

A year ago, online music seller CD Universe lost more than 300,000 credit cards to a Russian thief. Earlier this month, online credit-card clearinghouse Creditcards.com lost 55,000 credit card numbers to hackers.

Marino said that if recent history is any indication, Egghead (eggs) won't suffer any long-term damage.

"Next month should be pretty hard for them," Marino said. "But they will likely recover."

Liton, on the other hand, called it a "disaster" for Egghead, one that definitely will erode customer confidence. It also may have a ripple effect on the e-commerce industry, causing sales to dip as much as 10 percent.

Then again, "sales are doubling every year," Liton said. "Maybe it'll only go up 85 percent next year."

But both Liton and Marino agree that more hacking incidents in the coming months could slow online sales.

"It's still not that pervasive," Liton said. "It's not like it keeps on happening."

Consumers are also well aware of the risks associated with shopping online, Marino said.

"People will be a little more leery about giving credit cards out," he said. "If we continue to see more of these cases, then people will really be leery."

Topics: E-Commerce, Security

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