Product Guides

Leaked Customer Info: How Does It Actually Happen? A Guide for Startups

July 26, 2022

Data leaks are disastrous. When cybercriminals or competitors uncover sensitive customer info, they could use that information to target your enterprise and cripple your business operations in many different ways.

But as companies keep on collecting more data to improve efficiency and unlock more opportunities, the risk of customer info leaks and data breaches will likely only grow. 

By company size, large organizations are more likely to experience a breach or leak compared to smaller companies. 

In 2021, for instance, 74% of large companies in the U.S. experienced a data breach compared to 61% of small and medium-sized companies. In 2020, it was 43% against 12%.

data breach percentages for small and large businesses in the US and Canada

However, the size of your company doesn't mean a breach will have less severe consequences; compromised data has a similar impact on any business regardless of its size. 

As such, knowing what causes leaked customer info and how it happens is critical to prevent the leaks from happening.

In this article, you’ll learn:  

  • What Is Customer Information? Examples And 4 Different Types 
  • What Are Customer Information Leaks?
  • How Do Customer Info Leaks Happen And How Do They Affect Your Business?
  • 5 Best Practices to Avoid Customer Info Data Leaks and Secure Your Operations

In this guide, we’ll be primarily focusing on startups and small businesses, but the best practices on customer info will be applicable to businesses of all sizes.

With that in mind, let’s dive in…

What Is Customer Information? Examples And 4 Different Types 

Customer information is any data about your customers that can help you better understand who they are, what they like, and how they use your product or service. 

This information can be anything from a customer's name, address, email address, phone number, to shopping habits, payment methods, purchase history, and product specifications. 

Depending on your company and how you use customer information, it can also include payment data, credit card information, bank numbers, and more.

Customer data is critical to business growth as it helps a company increase sales and revenue, as well as build customer satisfaction. Which is why it’s so important to be able to categorize them and keep them safe.

4 Types of customer information

Generally speaking, there are 4 main types of customer information or data: 

1. Basic or identity data

This is the data that identifies a customer, such as a name, address, phone number, and so on. It's usually stored in a customer's system as a means of authentication. 

2. Engagement data

Engagement data describes the actions taken by a customer. For example, their purchases, site visits, likes, shares, and more. It's usually stored in a customer's system as a repository for company data. 

3. Behavioral data

Behavioral data describes the way a customer interacts with the company's systems. This includes the times and dates of logins and logouts, the routes customers take through the website, the content they view, and the search terms they use. 

4. Attitudinal data

Attitudinal data describes the customer's "state of mind". Such as the brand attitudes that a customer may have toward the company or its competitors, or whether they will continue to shop with the company in the future.

Now, what about customer information leaks?

What Are Customer Information Leaks?

Customer information leaks—or data leaks, are unintentional releases of customer data

This happens when a company’s system is compromised but usually, it’s when an employee leaks the information. Out of human negligence or error.

According to Kaspersky, the most common vulnerabilities targeted by malicious criminals include:

  • Weak credentials.
  • Stolen credentials.
  • Compromised assets.
  • Payment card frauds.
  • Third-party access.
  • And more.

A data leak could be as simple as copying and pasting a customer’s email address into a contact form. That information, combined with the customer’s name, might lead to a few dozen emails being sent to the customer’s account, thus breaching their privacy. 

It’s important to note that data leaks are usually accidental, although they can also be malicious. 

Before we cover how to prevent leaked customer info though, let’s take a look what’s the difference first.

Data leak vs data breach: What’s the difference?

Data leaks are a result of overlooked vulnerabilities or when someone with access to the data inadvertently exposes it to the public.

On the other hand, data breaches are solely caused by hackers or cybercriminals. Data thefts are examples of data breaches.

And it goes without saying that you should be aiming to prevent both.

Despite their varied causes, both data breaches and data leaks lead to dire consequences when sensitive company data is compromised.

Let’s take a look at some examples below.

How Do Customer Info Leaks Happen And How Do They Affect Your Business?

As mentioned above, customer info leaks are primarily an outcome of internal errors.

Some of the leading causes of customer data leaks include:

  • Misconfigured software settings.
  • Recycled passwords.
  • Social engineering.
  • Physical theft of hardware devices.
  • Software vulnerabilities.

Now, let’s take a look at each in detail to see how they work.

#1: Misconfigured software settings

When setting up your software, always pay close attention to the details and security settings. 

Having an incorrect setting is a much bigger problem than having no setting at all. In most cases, misconfigured settings are the root cause of data leaks.

A misconfigured firewall is an almost guaranteed way for customers’ data to leak. A firewall is a security tool that’s designed to keep unauthorized users out. When companies don’t properly configure firewalls, they allow employees to view and transfer sensitive data between internal company devices.

#2: Recycled passwords

Password recycling is a common practice that many large customers engage in. 

Password recycling happens when a company reuses the same password across multiple accounts or devices. This might seem like a harmless practice, but it actually has a high risk of leaking sensitive data.

Password recycling allows an attacker to readily identify which accounts a user has access to based on the login data they generate in one account. 

This is because most users choose easy-to-remember passwords that they end up using across multiple accounts.

#3: Social engineering

Social engineering isn’t a specific technique. 

It’s an umbrella term that describes any tactic that coerces information from users, including any security breaches or data leaks.

Social engineering attacks are a real threat. 

They involve psychological tricks that try to manipulate people into giving up sensitive data. 

There are many different kinds of social engineering attacks, and many of them rely on reused passwords from previous breaches. Alternatively, they target the weakest link, often - people.

#4: Physical theft of sensitive devices

Theft of sensitive devices is a rare but serious problem. It’s usually a direct result of poor device management.

Keeping devices secure is a battle that never ends. It’s a challenge that every organization faces. It’s also a reality that not every company overcomes. In some cases, sensitive devices are stolen by employees. In other cases, they’re stolen by third parties who have access to corporate networks.

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#5: Software vulnerabilities

Software vulnerabilities don’t always lead to data breaches. But they do lead to a lot of issues.

Software vulnerabilities are a result of bugs in code. They exist because software developers don’t test their code thoroughly enough. Often, they overlook simple issues, such as spelling mistakes, that have a huge impact on how the software behaves.

With the above in mind, what are the major damaging consequences of data leaks to a company? 

Some of the biggest reasons for customer info leaking due to software vulnerabilities include:

  • Financial loss — Data leaks can lead to financial loss for your company in a number of ways. The most direct impact is through the loss of potential business. Leaks could lead to loss of faith by customers, eventually taking their businesses elsewhere. Also, without the trust of your customers, they might not be willing to share information about their business with you. This can slow down or even stop the growth of your business.
  • Reputational damage — Beyond financial loss and lost customers, data leaks can lead to reputational damage. This is especially true if the data leak involves customers in the public eye. A data leak that affects a celebrity could result in a lawsuit. It could also lead to public calls for a boycott of your brand.
  • Operational downtime — Finally, a data leak can lead to downtime at your operations level. This could result from having to fix the data leak or from trying to contain the damage. At the most basic level, downtime at your operations level is a loss of productivity. You can’t process orders or service tickets when everyone is waiting for their data to be restored.

According to Centrify:

  • 71% of CMOs believe that the biggest cost of a security incident or data leak is the loss of brand value.
  • Companies and business owners expect a 9% drop in their global annual turnover as a result of the data privacy crisis.
  • 54% of customers don't believe that businesses have their best interests in mind.
Infographic on the effects data breaches take on clients

With this in mind, how do you avoid leaking customer info, exactly?

Let’s take a look at some best security and data practices for this.

5 Best Practices to Avoid Customer Info Data Leaks and Secure Your Operations

To prevent customer data leaks, you need a strong data protection strategy in place.

Some of the best ways to avoid customer info data leaks include:

  • Educating your staff.
  • Using multi-factor authentication.
  • Encrypting your data.
  • Implementing a data leak detection solution.
  • Limiting access to your data.

Now, let’s cover each in detail with examples.

1. Educate your staff

Part of getting your culture right around data security is making sure your team understands the threats and how to avoid them. 

So, if you want to avoid leaking sensitive information, the first best practice is to educate your staff

Data security is a team game, and if everyone on your team knows how to avoid a data leak and they’re all following best practices, you’re already miles ahead of the game. 

Educate everyone including your data protection officer, your business analysts, and your developers. Make sure they understand what data is stored where, who has access to it, and how it’s encrypted.

This also helps streamline your business operations once everyone is on the same page.

2. Use multi-factor authentication

Next, require multi-factor authentication before anyone can access your data. 

It’s already an important practice to use 2-factor authentication (2FA) with your login credentials. 

Multi-factor authentication is an extension of that idea. It means someone can’t access your account unless they have access to a secondary authentication method, such as a code sent to their phone.

3. Encrypt your data

Encryption is the act of scrambling data to make it unreadable to anyone but those who have access to the correct decryption key. 

If your data is encrypted, only the person who has the decryption key can access the information.

There are many encryption solutions available. Your best bet is to look for solutions that are easy to use, reliable, and well-supported. 

A good encryption solution will come with a support team that is available to help you manage your encryption keys.

You should also encrypt your sensitive documents and files within your communications. For example, see:

4. Implement a data leak detection solution

Data leaks happen. It’s virtually impossible to prevent every single one. 

However, with the right tools and practices, you can substantially reduce the risk of a data leak by being alerted of it immediately.

A data leak detection solution looks for unusual activity on your network. 

If it detects something out of the ordinary, it will alert you so you can investigate the source. 

A good data leak detection solution will be able to detect malicious activity, including attacks on your data, as well as human mistakes.

5. Limit access to your data

Finally, don’t grant everyone on your team access to the same set of data. 

If people outside your team need to access your data, create separate user accounts and grant them access only to the data they need. This includes clients, vendors, and contractors.

Another simple way to limit access to your sensitive data is through user roles and permission settings

This way, you can assign certain roles to certain people. For example, so that only executives can access and edit highly sensitive documents.

Alternatively, you can make it so that a department can view a document, but not edit or share it.

For even more info on preventing data leaks, be sure to see our guide on data security standards.

Preventing Leaked Customer Info And Data With A Secure Document Management System

Data security is an important part of any successful business. When handling customer information data, remember that your first priority should be to protect it, as any leak could wreak havoc on your entire business operation. 

While it’s inevitable that data might get leaked at some point, the best you can do is minimize risks and be ready for it when it happens. Keep an eye out for warning signs that a data leak might be imminent.

Also, don’t forget that privileged access management (PAM) is crucial for cybersecurity. Nevertheless, the workflow that handles each user's access levels has to be streamlined.

Now, if you’re handling a lot of sensitive information and customer data in digital files (such as PDFs), one way to secure them is with a document management system (DMS).

This essentially helps you securely:

  • Generate documents automatically.
  • Index and tag for search.
  • Collaborate with departments and employees.
  • Set up user roles and permission settings as mentioned above.
  • Archive documents.
  • Delete sensitive documents in a legally compliant way.
  • And more.

Is a document management system to safely manage your sensitive documents the right solution for your business?

See our guide on how to evaluate document management solutions for more info!

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