Cyber Insurance for the Clothing Industry 

As the owner of a fashion business, you may not necessarily consider cyber insurance as an essential cover, however as with any business which handles sensitive data, cyber insurance is an important cover which could help you in the event of a data breach or a cyber-attack.

The global rise in fast fashion, accelerated by ‘buy now pay later’ payment plans, free delivery options and instant shopping experiences through social media, has led to many fashion brands now providing an e-commerce offering across multiple platforms. This includes brands that sell their clothing direct to consumers and other retailers who sell a range of styles from different brands.

It goes without saying that in order to grow within the fashion-sphere, businesses need to offer a unique, affordable and easy to use online shopping platform, one which makes it easy for your customers to order, and easy for you to securely manage the data exchanged in those orders.

Each fashion business will handle different levels of customer data. For example, those who only have a bricks-and-mortar store with no online presence may handle small amounts of customer data, if any at all. Whereas those who sell via social media, or a full stack e-commerce platform will likely handle and store varying degrees of customer data.

In order to help paint a clearer picture of this, let’s consider the typical customer journey of a new customer who wants to order a t-shirt from a clothing website.

In this example, Sam, a new customer finds the website and starts the buying process by browsing for a t-shirt. Even the simple action of browsing for a t-shirt can enable an e-commerce website to start tracking anonymous user data (this sort of data is generally used for marketing and remarketing purposes).

When presented with an opportunity to get a discount code, Sam subscribes to the website mailing list and in doing so provides a name, email address and an account password (so they can track their orders later on.)

Finally, after browsing the site and providing more anonymous tracking data, Sam completes their purchase and provides additional data to the website, including a shipping address, a billing address and payment card details.

In this fundamental example, the customer has provided a name, an email address, a password, billing and shipping addresses and also payment card details. By submitting this through your website, it is now your responsibility to safely store and manage this data, even after you have fulfilled the order.

Even clothing businesses with the most robust data security measures can fall victim to cyber-crime and data loss, which can in turn be a very costly experience for the business concerned. That’s why even if your clothing business has strong data security measures in place, cyber insurance can offer an extra layer of protection to fashion brands should the worst happen and a data leak means a claim is raised against you.

In late January 2023, it was announced that the JD Sports retail group had suffered a cyber-attack which saw a massive data leak containing the information of up to 10 million customers. The lost data related to customer orders made between November 2018 and October 2020 from a number of JD Sports owned websites including; JD, Size?, Millets, Blacks and Scotts.

Upon discovery of the leak, JD notified the Information Commissioner’s Office and wrote to affected customers to let them know their personal data may have been compromised. The data leaked included customer names, billing and shipping addresses, phone numbers, order details and payment card details. JD had no reason to believe account passwords has been leaked, and also noted that the payment card details within the leak only included the last four digits of the customers payment card number and therefore the impact of this was somewhat limited.

Even though JD Sports has robust cyber security policies in place, it seems in this instance it wasn’t enough to prevent the data leak from happening. The fact JD Sports do not save their customers complete payment card details does look to have lessened the scale of this attack considerably, therefore it’s important to note that although robust security measures can’t always stop a data leak from happening, sometimes having strong security measures in place from the outset can significantly reduce the impact of a data leak, should one happen.

This serves as a stark warning to all fashion business owners who handle customer data – no matter the scale or size of your business you could easily fall victim to a cyber-attack and could be liable to pay out huge claims if this were to happen.

The best way to protect yourself from that is to have a good cyber insurance policy in place, one which can cover huge potential pay out costs and help to rebuild brand trust and reputation, which is quite often shattered after news about a cyber-attack gets out.

If you’re the owner of a fashion brand or clothing company and want to speak to an expert about cyber insurance for the clothing industry, then contact one of our specialist insurance advisors today.