InformatIon SecurIty BreacheS and the threat to conSumerS.pdf

InformatIon SecurIty BreacheS and the threat to conSumerS by Fred H. Cate September 2005 ? 2005 The Center for Information Policy Leadership at Hunton Williams LLP. The Center for Information Policy Leadership develops initiatives that encourage responsible informa- tion governance in today’s digital society. The Center is a member-driven organization that operates within the Privacy and Information Management practice at Hunton Williams LLP. Through col- laboration with industry leaders, consumer organizations and government representatives, the Center provides leadership in developing policy to help ensure privacy and information security while balancing economic and societal needs and interests in today’s global information age. rmationpolicy- . 2Summary ? Information security “breaches” take many forms and occur in a wide variety of settings. However, contrary to recent press reports, they do not appear to be increasing. ? Research indicates that only a small percentage of breaches result in any harmful use of data. ? Account fraud and true identity fraud — the two identity-based frauds most feared by con- sumers and policy makers — are actually declining. ? The vulnerability of unsecured personal data and the threat of identity-based frauds neverthe- less continue to grow and evolve as perpetrators become more sophisticated in how they seek to obtain and exploit personal information. ? That threat, and particularly the risk of synthetic identity fraud, poses real dangers for indi- viduals, institutions, and the information economy. ? Action to combat that threat must be thoughtful, well targeted, and forward-looking if it is to guard against new risks and do so without compromising the information-based services that the public increasingly enjoys and expects. Introduction The unprecedented number of disclosures about information security “breaches” during the first half of 2005 has brought into sharp focus the importance of securing personal i