With tax credits being dished out for all types of programs, ranging from hybrid vehicles and solar energy to home buying and charitable donations, AGV Technologies CEO JR Smith has another idea in mind: Tax incentives to those using security software protect themselves online.
In response to a recent Maine US District Court’s ruling that Ocean Bank is not liable for $300,000 stolen by hackers from a Construction Company’s online banking account, Smith believes it is important to have a tax incentives in place to further encourage users to make investments in securing themselves online.
These battles and disputes are far from new. In one incident in 2009, Dallas based PlainsCapital Bank actually filed suit against one of its clients, Hillary Machinery, after a series of fraudulent ACH transactions siphoned $801,495 from the company’s bank account. While the bank managed to get back about $600,000 of the funds, Hillary requested that the bank refund the remaining $200,000. PlainsCapital responded by filing a lawsuit against the company. The two sides ended up working out an undisclosed settlement.
In the Ocean Bank case, the judge asserted it was Patco’s responsibility to protect account credentials – mainly by using Internet security and identity protection tools. AVG’s Smith thinks the decision represents a critical shift in liability of the industry’s willingness to absorb the skyrocketing costs of identity theft and online fraud.
“AVG has long predicted that banks and retailers would reach a tipping point where they could no longer fully cover losses that are incurred as a result of small businesses and consumers not taking responsibility for securing their personal information,” said Smith. “More than two years ago AVG began asking governments to consider tax incentives for consumers and small businesses as a way of helping them understand their role in securing the World Wide Web. We believe the money ultimately saved by thwarting online attacks could not only offset, but supersede the revenues lost in a tax incentive.”
Smith would not be surprised if the Maine decision is soon joined by others that take the side of the retailer and banks who have long covered for their customers’ inattention to security threats.
“Banks and retailers are going to expect small businesses and consumers to meet them halfway when it comes to security,” said Smith. “AVG believes that tax incentives for small businesses and consumers are important steps in the process of helping them understand they are a critical link in the security chain. Because consumers and small businesses really do not have a choice when it comes to doing business in the digital world, and as business and government are completely dependent on the worldwide web to conduct commerce, it is important they have tax incentives to make the right security investments.”
Furthermore, AVG’s recent SMB landscape report found that one in seven small businesses have no security software (rising to one in four for single-employee businesses in the US) – and less than half are aware of the real and tangible threats posed by Internet based attacks. AVG also found that 77 percent of firms recognize that a security breach could have a significant impact on their business and 83 percent feel that having the right level of protection is critical to their business. Yet less than half have a clear security policy in place.
Obviously, AVG and other security vendors would have much to gain in a scenario where tax incentives were put in place for consumers and businesses to utilize security software. The auto-industry, while it still struggled overall, benefited immensely from government bailouts and consumer tax incentives for buying environmentally friendly vehicles. Why not the IT security industry?
As the governments of the world work to establish the right balance between control and freedom for citizens online, it has proven to be a double-edged sword. There are many controversies surrounding online privacy and the government’s role in securing citizens online, so could a tax incentive program like this be a good way to encourage people to increase their individual security posture while not compromising on the privacy side?