Data Breaches Lead to Identity Theft and Cost... - Legal News


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Legal » Data Breaches Lead to Identity Theft and Cost Billions

Data Breaches Lead to Identity Theft and Cost Billions

Data Breaches Lead to Identity Theft and Cost Billions
The content is accurate at the time of publication and is subject to change.

Last year there were 1,611 data breaches—a 48% percent increase over 2011, according to the Open Security Foundation. The data is increasingly being used by criminals to commit identity fraud. A report from Javelin Strategy and Research estimates that 51% of all fraud victims had their personal information leaked in a data breach.

In 2010, people receiving a data breach notification from their bank, credit card issuer or other institution had a one-in-nine chance of becoming a victim of fraud. Jump ahead two years to 2012, and one in four people receiving that same notification became fraud victims.

Javelin says that a single breach can mean the loss of billions of dollars, and cites one massive incident in South Carolina that cost an average of $776 per customer impacted and $5.2 billion for merchants and financial institutions involved.

In that instance the South Carolina Department of Revenue was hacked by people looking for Social Security numbers. They got them—3.6 million of them. It was one of the most costly breaches in history.

Steps to take

This infographic illustrates how data breaches can lead to fraud, and what steps consumers can take to protect themselves. These include enrolling in free identity protection services when they are offered and signing up for account alerts so consumers are notified of possible fraudulent activity. The report showed that only 20% of data breach victims signed up for free identity protection.

Financial institutions are encouraged to stop using Social Security numbers as an account authentication method. They are used as a means of identity verification by an estimated 80% of the 25 biggest financial institutions in the country, according to Javelin. Companies that keep consumer data should encrypt sensitive information, conduct regular system audits and establish checklists for security migration.

The damage done

Thieves use debit and credit card numbers to buy things and drain accounts. Social Security numbers can be used to open new accounts and take over existing ones. When an account is hijacked, it costs an average of $5,100. A stolen debit or credit card means an average loss of $1,600.

If their credit card or debit card information is stolen, people can simply close the account, but a stolen Social Security number is far more difficult to contain. If this happens, consumers must stay on their guard for years to come, say the report’s authors.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

A Quarter of Consumers Affected by Payment Card Fraud
A Quarter of Consumers Affected by Payment Card Fraud

Posted: July 09, 2014

In the last five years one in four people has been the victim of card fraud, according to a global study by ACI Worldwide. Fraud includes unauthorized activity on debit cards, credit cards or prepaid cards. Continue reading

More Than Half of Consumers Fear Credit Card Data Theft
More Than Half of Consumers Fear Credit Card Data Theft

Posted: November 10, 2014

A recent survey reveals that many people are going into the holiday season worrying about more than just what to get their mother-in-law for Christmas. Continue reading

MasterCard Steps Up Fraud and ID Theft Prevention
MasterCard Steps Up Fraud and ID Theft Prevention

Posted: June 17, 2014

In the face of several recent major data breaches and increasing consumer concern about payment security, MasterCard is putting in place new measures to protect cardholders. Continue reading

Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, and more up to the quarterly maximum, each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
For Excellent, Good Credit
Earn unlimited 1.5% cash back on every purchase, every day
For Average, Fair, Limited Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!