Will the TalkTalk Scandal End the Company?
It’s fair to say that TalkTalk have had a tough time of it lately, customers have been leaving in droves and what little brand cache they had has been damaged – perhaps beyond the point of any repair. It’s a dire situation for a company that burst onto the market with low prices and big promises, but it’s worth looking back at what got the company into this situation, if only to work out whether the company can survive in any form after such a devastating loss of confidence among consumers.
In October of this year, TalkTalk were made aware that they had experienced what was described by the company as a “significant and sustained cyber-attack”, which it was announced had made available the personal and banking details of up to four million customers. The company then received a ransom demand from a group that claimed to be responsible, set at 80,000 bitcoin, which is around £17 million. Though the company announced the hack on the 22nd of October, by which time a number of customers had already complained they were targets of hacking attempts.
Naturally, this pricked the ears of the media, and before long accusations that TalkTalk had attempted to cover up the hack were flying. This lead the Chair of the Home Office Affairs Select Committee to say “Suggestions that TalkTalk has covered up both the scale and duration of this attack … must be thoroughly investigated.”
Two days later, TalkTalk announced that the hack had affected a smaller amount of customers financial information than previously thought and that the data that was taken was not enough to withdraw money from an account, though it did leave them open to credit fraud. ON the 6th of November, the company revealed that the hack had revealed 156,959 customer accounts and 15,656 sort codes and bank account numbers had been taken. All in all, it accounted for around 4% of all accounts with the company.
Unfortunately for TalkTalk, this was the third such attack within the year, and customers had seen just about enough of it. This lead to a mass exodus of customers on the 0844 800 3124 contact number for TalkTalk, with the company voluntarily waiving termination fees for customers monetarily affected by the hack, though many customers opted to use letter templates to cancel their TalkTalk account.
For their part, TalkTalk have moved to make their back end a much more secure place, encrypting all information and making it harder for hackers to get in. Not only that, but they’re offering free lifetime credit report through ClearScore and 12 months free credit monitoring for every customer. They’ve also announced that customers can also upgrade their package for free during the month of December, which means that you can add one of the following services to your package at no cost: TV including movies, kids entertainment and sports; a mobile SIM with a monthly allowance of free texts, data and calls; unlimited UK landline and mobile calls; or a broadband health check.
Dido Harding, CEO of TalkTalk said “TalkTalk takes the security of customers’ data extremely seriously and we are taking significant further steps to ensure our systems are protected, as well as writing to all our customers outlining what we are doing to keep their data safe. In recognition of the unavoidable uncertainty, and because we know that doing what is right for our customers will ensure the best possible outcome for the company over the longer term, we are today announcing the offer of a choice of free upgraded services to all our customers.”
Five men were also arrested in relation to the hack, including a 20 year old man from Staffordshire, a 16 year old boy from Norwich, a 16 year old boy from Feltham and a 15 year old boy from County Antrim, but the damage, from a PR point of view as well as a material sense had already been done, TalkTalk is now seen as tainted goods. So can TalkTalk survive?
It’s hard to tell from here, but industry experts like James Quinn suggest that TalkTalk could be the target of an acquisition by one of the bigger broadband operators in the UK like Sky, BT or Virgin Media. At present, there’s no evidence to say those talks are taking place, but it makes sense for TalkTalk to exit the market at this area. They’ve lost a number of customers and the name is now synonymous with a large scale hack. If, say, Sky purchased the company, they could fold their customers into their service and take on their material holdings for a discount price.
Before all that though, TalkTalk are going to be the subject of a parliamentary investigation into their security practices, as well as in internal investigation by BAE, who were hired by TalkTalk to perform the investigation. Only time will tell what kind of sanctions and recommendations are layed on the company from there, but it seems like its only a matter of time before TalkTalk ceases to trade as we know it.