It may not always be top of mind, but protecting your personal data is essential to also protecting your money. Data privacy is the practice of keeping digital information protected from unauthorized access—both for individuals and businesses. Personally identifiable information (PII) like Social Security numbers, bank account information, and passwords are valuable assets often stolen through data breaches. When bad actors get ahold of these details, it can lead to fraud and identity theft.
In 2023 alone, there were more than 3,000 data compromises affecting over 350 million people, with healthcare and financial services being the most affected industries. Knowing how important data privacy is will help prevent those breaches while keeping you financially safe.
What Is Identity Theft and How Does It Occur?
Identity theft is a serious crime where someone steals and uses another person’s personal information for fraud or deception, usually for financial gain. It comes in many forms, including financial, medical, and criminal identity theft. Some of the most common methods of identity theft are:
- Phishing: Scammers send emails or messages that look like they’re from someone you trust to get you to hand over personal info or click on bad links.
- Hacking: Cybercriminals breach computer systems and networks to steal sensitive info and exploit vulnerabilities for personal gain.
- Social Engineering: Attackers trick you into giving up confidential information by pretending to be a trusted entity or creating false scenarios.
The effects of identity theft can be severe and far-reaching. Victims feel emotional trauma, violation, stress, and anxiety after their personal information is used. In fact, a consumer impact report by the Identity Theft Resource Center found that 56% of consumers who experienced identity theft sought emotional support to cope with the fallout.
Identity theft can also be a financial disaster. Thieves can drain existing accounts or open new ones in the victim’s name, leaving a trail of unauthorized transactions and debt. Legally, it can be just as bad. Victims can find themselves in court battles, having to prove their innocence for crimes they didn’t commit. Repairing a damaged credit report can be a long and frustrating process that can take months or even years.
Knowing how identity theft works and what it can do to you is key to improving your data privacy and protecting your personal info and finances.
How Do Data Breaches Lead to Identity Theft?
While not all data breaches result in identity theft, and identity theft can occur without a data breach, the two are closely linked. "The statistics indicate there is a very strong correlation," says Tracy Swaim, Fraud Risk Manager at HTLF. "The volume of PII available for sale on the deep web really shows what these bad actors are up to. I have seen data packets and databases for sale that specifically say ‘medical insurance’, ‘e-commerce’, or include full credit card numbers, and that is a clue to me that they hacked a system."
Understanding the connection between data breaches and identity theft can help you be proactive in protecting your information from unauthorized access. Companies also need to prioritize cybersecurity and educate employees on potential threats.
"As consumers, we want to know our doctor's office or bank is taking this seriously. Unfortunately, we often have no choice but to give up information, and we want to know it's secure," Swaim says. "I don't want to see lists of social security numbers floating around in a doctor's office. I want them to take that seriously because I take it seriously," she asserts.
How Cybercriminals Use Social Engineering to Exploit Stolen Data
Social engineering is a manipulation technique that cybercriminals use to deceive individuals into providing private information, access, or valuables. With stolen data, bad actors craft convincing scams that look legitimate to get you to provide more sensitive info or do a specific action. Several methods of social engineering include:
- Phishing Attacks: Using stolen data, attackers send emails or messages that look like they’re from a trusted source, asking you to click a link, download an attachment, or give up sensitive info. For example, they might use your bank account info to send you an email posing as your bank, asking you to confirm your account login.
- Pretexting: An individual creates a fabricated scenario to manipulate someone into divulging personal or sensitive information. For example, a bad actor might pose as a bank representative and claim there is a problem with your account, prompting you to provide account details and passwords.
- Baiting: Attackers use false promises to lure you into a trap. They might use stolen data to create a compelling scenario, like offering a free software download that, when you access it, installs malware on your device that grants them access.
- Spear Phishing This is targeted phishing. Attackers use stolen data to personalize their attack, making it more convincing. For example, they might know specific details about your transactions and craft an email that addresses you by name and includes info about your accounts.
According to Swaim, phishing is one of the most common traps people get caught up in. "Once that happens, they may have access to anything you have saved, like passwords or auto-fills, which can be pretty devastating."
These sophisticated tactics highlight the importance of staying vigilant and informed about the latest social engineering methods. By recognizing these schemes and taking proactive measures, you can better protect your personal information from cybercriminals.
The Role of Banks in Protecting Customer Data
Banks play a crucial role in safeguarding customer data and preventing fraud, which can be challenging as scammers quickly come up with new ways to target unsuspecting victims. In Swaim’s role as Fraud Risk Manager, she can act as a line of defense for HTLF. "I work behind the scenes with other departments on procedures and policies to shore up any gaps where a bad actor could get in and exploit our systems, our customers, or even our internal team members,” explains Swaim.
In addition to continually tracking fraud trends and scammer activities, banking institutions can also put security practices in place and keep an open dialog with their customers.
Common Bank Security Measures
Banks use many advanced security measures to protect customer information and maintain the integrity of financial transactions.
- Data Encryption: Banks use advanced encryption methods to protect sensitive data during transmission and storage. This ensures that even if data is intercepted, it cannot be read without the encryption key.
- Fraud Detection Systems: Banks implement sophisticated fraud detection systems that monitor real-time transactions to identify and prevent suspicious activities. These systems use machine-learning algorithms to detect patterns that may indicate fraudulent behavior.
- Multi-Factor Authentication (MFA): To enhance security, banks often require multi-factor authentication for accessing accounts. This adds an extra layer of protection by requiring additional verification, such as a text message code or biometric scan, beyond just a password.
By putting robust security measures in place, banks significantly reduce the risk of data breaches and unauthorized access, ensuring customer information remains secure.
Enhancing Customer Awareness
To effectively protect customer data, banks emphasize the importance of educating their clients on cybersecurity best practices.
- Educational Resources: Financial institutions provide educational resources to help customers understand how to protect their data. This includes information on recognizing phishing attempts, creating strong passwords, and safe online practices.
- Assistance and Guidance: Customers can turn to their bank for personalized assistance and guidance with questions or concerns about data security. Customers are encouraged to visit their bank's website or speak directly with a banker for advice on how to protect their information.
- Awareness Campaigns: Banks often run awareness campaigns highlighting the importance of data security. These campaigns can include email newsletters, webinars, and in-branch posters that provide tips and best practices for safeguarding personal information.
Fostering Customer Collaboration
Building a secure financial environment requires a collaborative effort between banks and their customers.
- Shared Responsibility: Protecting customer data is a shared responsibility between banks and their customers. Banks rely on customers to follow security best practices, such as regularly monitoring their accounts and reporting suspicious activities promptly.
- Open Communication: Effective communication between banks and customers is essential in preventing fraud. Banks encourage customers to report any suspicious activity immediately, and in turn, banks keep customers informed about potential threats and security updates.
- Proactive Measures: Banks and customers must work together proactively to enhance security. This includes regular updates of contact information, opting into security alerts, and participating in educational programs offered by the bank.
Stay aware of cybercriminals' tricks, such as identity theft and social engineering, to significantly reduce your risk of falling victim to these threats. Our team is here to help protect you from scams. To learn more, visit our fraud protection resource center.
Explore Fraud Protection Resources
These links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by HTLF of any of the products, services or opinions of the corporation or organization or individual. HTLF bears no responsibility for the accuracy, legality or content of the external site or for that of the subsequent links. Contact the external site for answers to questions regarding its content and privacy rules.