We give out our confidential personal information all the time with the expectation that it will be protected. When you apply for a credit card, start a new job or visit the doctor’s office, for example, your personal information is collected and stored. But what happens when that information is stored improperly or mistakenly leaked? For you, the results can be serious.
Identity theft is the most dangerous repercussion of leaked confidential information. If an identity thief gains access to your name, address and Social Security number, fraudulent accounts can be created in your name and thousands of dollars worth of charges can be made on those accounts. Even more damaging, some identity theft cases involve criminal acts using stolen identities. For example, if a criminal is arrested and uses a fraudulent identification card in your name, you could have a criminal record, outstanding warrants and fines that you don’t even know about. Cleaning up a credit report and a criminal record because of identity theft can be a long, grueling and a sometimes expensive process.
Most European countries and Canada have federal laws to protect the security of confidential information, but the United States does not have such laws. Instead, the U.S. has sectoral privacy laws like the Health Insurance Portability and Accountability Act (HIPPA), which protects medical records, and the Fair Credit Reporting Act, which regulates consumer credit rights. But these laws do not protect all uses of personal information, though some states, like California, have broader consumer privacy laws.
In the last several years there have been numerous instances where data breaches have compromised the confidential financial information of millions of Americans. The most recent large-scale data breach occurred at TJX Companies, Inc. in 2006 and reportedly affected over 450,000 customers. Earlier in the same year, the U.S. Department of Veterans Affairs also experienced a massive security breach, in which Social Security numbers of 26.5 million veterans were stolen. Similar breaches have occurred at ChoicePoint Inc., Bank of America, CardSystems Solutions and DSW Shoe Warehouse.