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How a Data Breach Can Impact You

Imagine using an investment platform in hopes of getting some sweet returns, only to find out that a hacker stole some of your personal info from the system. That’ll get you riled up for sure. Chances are, you or someone you know has suffered something similar already.

In November 2021, the Robinhood e-trading platform was hacked by someone impersonating an employee.1 Using fake credentials, the poser got access to 5 million customer email addresses. Millions more had their names accessed, and the thief even got hold of thousands of customer phone numbers. Maybe the worst? A small group had the combination of their names, birth dates and zip codes exposed. Yikes!

This data breach means millions of headaches and who knows how many unsolicited texts, calls, and emails to unsuspecting customers nationwide. But here’s the thing: Data breaches aren’t unusual (cue Tom Jones’ 1965 hit “It’s Not Unusual”). In fact, they appear to be on the rise. The smartest way to protect yourself from these unsavory intruders is to make sure you’re covered with identity theft protection.

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As you might guess, both Robinhood and law enforcement officials are investigating the data breach. And the company has said that so far they haven’t seen any evidence of financial losses to customers. Further, Robinhood doesn’t think any of the hacked information included Social Security numbers, debit card numbers or bank account info. That’s comforting...I think. But alas, the investigation continues.

While being a part of a data breach doesn’t automatically mean your identity will be stolen, it does put you more at risk of becoming a victim of identity theft.

What Is a Data Breach?

A data breach is a security incident where personal and confidential information is stolen by another individual. The information compromised can include things like your name, birth date, street address, health care history, customer lists, Social Security number, and bank account information. If the company or organization discovers an unauthorized individual has viewed that information, they’ve had a data breach.

How Is a Data Breach Different From Identity Theft?

Identity theft involves someone actually using your private information—usually for their own financial gain or to impersonate you. I’ve personally experienced this, and let me tell you, it was not a good time. Someone got a hold of my social security number, phone number and an old address, and ended up opening multiple cell phone accounts across the country under my name and racked up a whole bunch of debt. I found out about it when a debt collector called me to collect on the money owed. As you can imagine, confusion and chaos ensued as I tried to tidy the mess up for months. So yeah, that’s identity theft. You might think you qualify as an identity theft victim if your personal information was exposed in a data breach—but the good news is, that’s not always the case! So breathe easy.

Recent Data Breaches

Some data breaches seem more “minor” in nature because the information they gather feels less significant (like Facebook’s misuse of private data that impacted a potential 87 million users).2

Sure, gaining access to information like names, email addresses, and passwords might not seem as harmful as someone having your Social Security number. But any data breach can leave you at risk of identity theft if the hackers want to use that information against you. Even a breach of less sensitive information like the one with Under Armour’s MyFitnessPal users can still affect millions of people—150 million, to be exact.3 On a positive note, I’m honeslty impressed that there’s 150 million people out there attempting to get in shape. Way to go, guys.

Just reading the words data breach probably makes you think of one of the most infamous breaches in recent history. It’s hard to forget the far-reaching Equifax blunder that exposed Social Security numbers, birth dates, home addresses, tax ID numbers, and driver’s license information of potentially 148 million people.4

The sad truth is, a lot of the industries we trust to keep personal information safe are prone to being hacked.

Company

Date

Potential People Impacted

Whole Foods Market5

Oct. 2021

82 million

GetHealth6

Sept. 2021

61 million

Neiman Marcus7

Sept. 2021

4.6 million

Microsoft Power Apps8

Aug. 2021

38 million

OneMoreLead9

Aug. 2021

126 million

20/20 Eyecare Network10

May 2021

3 million

Facebook11

April 2021

533 million

LinkedIn12

April 2021

700 million

ParkMobile 13

April 2021

21 million

Reverb14

April 2021

5.6 million

COMB15

Feb. 2021

3.8 billion

MeetMindful16

Jan. 2021

2 million

Pixlr17

Jan. 2021

2 million

Socialark18

Jan. 2021

214 million

VIPGames19

Jan. 2021

23 million

Capital One Financial Corporation20

July 2019

106 million

First American Financial Corporation21

May 2019

885 million

Marriott Hotels22

Nov. 2018

500 million

SunTrust Banks23

April 2018

1.5 million

Panera Bread24

April 2018

37 million

Facebook25

March 2018

30 million

Under Armour26

March 2018

150 million

Orbitz27

March 2018

880,000

BJC HealthCare28

March 2018

33,420

Uber29

Nov. 2017

57 million

Equifax30

Sept. 2017

147 million

*To find more recent breaches, visit the Privacy Rights Clearinghouse.

 

How Do Data Breaches Happen?

It seems like big-time security measures should be enough to keep hackers at bay, but no safety measure is surefire. Large-scale or minor data breaches can happen anytime a hacker or anyone who isn't authorized gains access to sensitive files or information. And they happen a lot more often than you might think.

Generally, I’m a big fan of vulnerability, like in a Brene Brown kind of way, but in this case, it’s not the good kind. It’s the hacker kind. So, who or what is to blame for making these trusted companies vulnerable to data breaches? Anything as minor as a weak password can cause a breach. Like when you’ve used the same password pickles98 for the last 23 years across every single online account you have. Sometimes though, it's a missing security patch or a system glitch that's at fault.

And a company can unknowingly trigger the leak of information themselves too! This type of incident is known as an "accidental data breach" and can be caused by things like failure to follow password guidelines or public-facing web services. We’ve all been there. I remember being a kid and having “accidental leaks” in class. Turns out, whether it’s a data breach or the second grade, it’s not a good time either way.

Whatever the case, these types of data breaches don't seem to be slowing down. A 2020 report by McAfee shows that the global cost of cybercrime in 2021 is expected to exceed a trillion dollars.31 Which is a million millions. A thousand billions. Yes, it makes my heard hurt, too.

How Do I Know if I’ve Been Affected by a Data Breach?

If a company has experienced a data breach, they’re required by state law to let you know about it.32 It’s news no one wants to hear, but knowing allows you to become hyperalert and keep an eye on things moving forward.

Recently, Equifax settled their agreement to compensate for the way they handled their 2017 data breach.

If you were one of the 147 million affected (which the odds are you were), you can now file a claim that will give you compensation for credit monitoring, loss of time and money, and even a partial reimbursement for any monitoring you’ve already purchased with Equifax.33 I wouldn’t get too pumped on the reimbursement part though. Splitting the pie with 147 million people means crumbs for everyone. And you get a crumb! And you get a crumb!

Now if you weren’t affected by the breach, you still need to make sure you’re protected by more than just simple credit monitoring. Plus, it’s probably hard to trust Equifax with your personal information after a breach that large. I mean, I still have trust issues after my favorite coffeeshop once gave me decaf coffee by accident. So when it comes to solid defense, you need to get ID theft protection that will not only protect your information, but more importantly help you clean up any messes that come with these awful data breaches.

What Can I Do to Protect Myself From Data Breaches?

Here’s the bad news: There’s not a whole lot you can do to protect yourself from a data breach. These days, your personal information is out there somewhere on plenty of different platforms—and no company is 100% secure from a breach.

But here’s the good news: It’s not all doom and gloom. I wouldn’t lose sleep over it. There are plenty of common security practices you can put into place to help protect yourself before a breach happens.

Shred documents with your personal information listed, never keep your Social Security card in your wallet, and be cautious about who you share your personal information with. And don’t forget to arm yourself with identity theft protection.

What Can I Do to Protect Myself From Identity Theft After a Breach?

If a company with your information has a data breach, there are a few important steps you can take to avoid becoming a victim of identity theft. Remember, a breach doesn’t automatically mean your identity has been stolen.

Change Your Passwords

It’s a good idea to go ahead and change your passwords—especially if you use the same password in multiple places. Pro tip: Don’t use the same password across accounts! Using the same password for all your social media profiles, email addresses, and bank accounts is just asking for trouble. Instead, you should always use unique passwords and change them every 90 days. I know you think I’m a mad man for saying that, but this is the price to pay for digital safety in the modern world.

Creating diverse passwords can be tricky. But whatever you do, don’t rely on a phrase or anything that is easy to guess. (Sorry, that means famous quotes and maiden names aren’t good fallbacks.) Get creative!

Let me help you with this:

  • Use a combination of uppercase and lowercase letters.
  • Use special characters (like ! or # or $).
  • Make your passwords long (12 characters minimum).
  • Use random words strung together (instead of “merrychristmas” try “GrinchHome@loneElf18”).

Check Your Credit Report

Okay, we aren’t worried about your credit score here (in fact, we never are). Instead, look through your credit report to see if anything suspicious or odd stands out to you.

You can get one free credit report per year from each of the three major credit-monitoring bureaus. This means you can check your credit report every 3–4 months. If you can stay on top of your credit report, you could have the upper hand in noticing suspicious activity.

Look for red flags like these:

  • Inactive accounts that suddenly have activity on them
  • A line of credit appears that you didn’t open
  • Your personal information is incorrect
  • A good standing account is in collections
  • A credit inquiry pops up that you didn’t apply for

Never ignore red flags! Ironically, that advice works for credit reports, and even better for relationships.

We know it can be annoying to sift through your bank transactions each day. But then again, if you can make time to scroll through your social media feeds, you should be able to make time to keep your money and identity safe. You need some ice for that burn? But seriously, make time for this stuff!

Your bank should alert you if they see anything irregular going on—but don’t rely on that. It’s much more beneficial if you're the one checking your account every single day. Because no one cares about your financial safety as much as you.

Get Identity Theft Protection

A solid identity theft protection program can help keep you from being a sitting duck waiting for identity theft to find you. Be proactive! Make sure you’re prepared before you become a victim of a data breach. You can actually take action to protect yourself from identity theft!

Safeguard yourself and your family from the nightmare of identity theft. RamseyTrusted provider Zander Insurance offers an identity theft protection program that can give you the security and peace of mind you need. It’s the same protection I personally use, and it will save your butt when you get in an identity theft rut.

George Kamel

About the author

George Kamel

George Kamel is a personal finance expert and host of The Fine Print Podcast. Since 2013, George has served at Ramsey Solutions where he teaches on how to spend less money, save more, and avoid consumer traps. He is also the host of The EntreLeadership Podcast.

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