What happens when mom & pop are storing your name and credit card # in plain text and then your identity gets stolen and credit ruined? Should we still be "charitable" to them and their d-bag nephew?
The concern in this case is when there is some social problem with being in Mom & Pop Inc's customer database. There are probably some people that buy some things that they don't want other people to know about. When the database gets hacked and you are linked to being their customer, that is the unfortunate and potentially damaging information leak. A credit card just gets reissued and the bank reverses the transaction. No big deal.
https://www.thestreet.com/personal-finance/credit-cards/cred...
Not necessarily, depending on where you're based.