Study Shows Data Breaches Increase Risk of Identity Fraud

If you have ever had the unfortunate experience of having your sensitive information breached, it should come as no surprise that you might have been also been a victim of identity theft.

A new study by Javelin Strategy and Research, titled "Data at Rest is Data at Risk: Confronting a Singular Threat to Three Major U.S. Industries," reports that 4.4 million Americans, or more than 25 percent, of the 16 million victims who were notified in 2012 that their payment card information was compromised in a data breach became victims of fraud with regards to their debit or credit card.

Also suffering from identity fraud were 1.26 million Americans whose social security were comprised, 324,000 Americans whose bank account numbers were comprised and 270,000 Americans whose online banking credentials were comprised.

The Javelin study revealed that the industries most at risk for data breaches and fraud are retail, financial and healthcare. This is because payment cards are the most accepted and popular form of payment among retailers, large amounts of client information are stored in financial institutions, and the healthcare industry's transition to the digital world with electronic health records.

Javelin offers tips for these industries to prevent sensitive data from ending up in the wrong hands. The first step is locating and identifying sensitive information such as consumer bank account data, payment card data, social security numbers, personally identifiable information, trade secrets or any other data that has value to the organization and can result in fraud if comprised. Then they must classify the information, deploy security measures based on the categories of data, and create and enforce policies intended to prevent unprotected data from being mismanaged in the future.

These precautions must be done in order to prevent potentially devastating scenarios for both consumers and the organizations they serve.

“By breaching the data stores of businesses in the financial, healthcare and retail industries, criminals can obtain the fuel they need to execute various fraud schemes, and these crimes have crippling consequences,” Al Pascual, senior analyst of security, risk and fraud at Javelin Strategy and Research, said in a statement. “Identifying and protecting the sensitive information typically stored by these industries is essential for mitigating the risk of a data breach and, therefore, the risk of financial loss to data custodians, consumers and third-party businesses.”