Debunking data leakage: Why it happens and how to avoid it

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A security breach could cost enterprises $551,000 based on typical losses and businesses incurring this expense. 

But that’s not even the most alarming part.  

As of 2024, the third-largest IT security threat is not intrusion from savvy cybercriminals — it’s accidental data leaks by employees.

Whether intentional or unintentional, data leakage can disastrously impact your company's finances and customer trust levels. 

In this article, we’ll explain data leakage and the best ways your business can prevent it from happening. 

What is data leakage?

Data leakage is a cybersecurity incident involving unauthorized access or accidental release of sensitive information, such as social security numbers, from within an organization to an external source. 

Data leakage is a risk if any part of your website’s security is vulnerable, especially if your intrusion protection system (IPS) isn’t operating effectively. 

It’s important to note that there’s no single cause of a data leak; it could stem from: 

  • Poor password policies 
  • System updates losing track of ‘old’ data 
  • Scams, such as phishing emails used to access company data 
  • Lack of system protection 

That means that data leaks could result from technical issues such as cloud security, an insufficient server, or a bug in your system. However, they can also occur from an employee mistakenly losing a hard drive containing personally identifiable information (PII), such as phone or social security numbers or intellectual property (IP). 

How serious are the consequences of a data leakage? 

Data leakage can have a significant impact on your business. 

Even mega-businesses like Meta aren’t immune. In 2021, the Data Protection Commission fined the company $265 million for unsound proper security practices, such as not recognizing a vulnerability in their system and practicing poor record-keeping, which resulted in the leak of personal user information. 

Some of the consequences of data leakage include: 

  • Regulatory penalties: Data protection laws, such as the General Data Protection Regulation (GDPR) and the Federal Trade Commission Act, are becoming increasingly strict. For example, violating Article 83 of the GDPR could cost your business 20 million euros, which is approximately $21,745,000.00 USD. This also means that if you’re responsible for leaking data that impacts customers or other businesses, they have every right to take legal action against your company.
  • Reputational damage and loss of client trust: Data leaks highlight vulnerabilities in a company’s security system, causing customers, staff, and stakeholders to question your credibility and reliability. For example, in 2022, Pegasus Airlines failed to password-protect an AWS S3 storage bucket filled with confidential files, lines of code, and plain-text passwords, exposing 23 million files of sensitive data. 
  • Cost of calling in an incident response team: Once a data leak occurs, you are required to call in a specialized incident response team to investigate where the leak came from, minimize the impact, and get your system back to normal. But these teams don’t come cheap, with estimated costs of $1.58 million
  • The hassle of updating to a new security system: The aftermath of a data leakage is not a quick-fix solution. A data leak indicates that a part of your security system is flawed and, therefore, needs to be replaced — or completely overhauled. Most of the time, this means staff retraining and data migration to the new system, which significantly disrupts daily operations (and your bottom line). 

Understanding what data leakage is and its potential consequences on your business is the only way to minimize your risk. 

What are the different types of data leakages?

Data leakages fall into three main areas: internal, physical, and electronic

Internal data leakage 

Internal data leakage refers to incidents where personal details or sensitive information is leaked from within a company without authorization. 

This includes: 

  • Employees with a desire for revenge who then share customer information with a competitor 
  • HR departments accidentally making payment details open to public access 

Internal data leakage may occur by accident or be a deliberate action by an employee. 

Physical data leakage 

Physical data leakage stems from the corruption, loss, or theft of physical hardware, such as: 

  • Accidentally losing a USB drive containing credit card information 
  • Discarding old computers without wiping hard drives 

Electronic data leakage

Electronic data leakage happens when a vulnerability in your computer system allows unauthorized information to be leaked. This includes: 

  • Malware infecting a backdoor in your application or CMS due to not updating those 
  • Improper password protection resulting in unauthorized data access

For example, a data leak in February 2024 exposed 26 billion records from social media platforms, including Twitter and LinkedIn, Adobe, Evite, and government organizations.

What are the main causes of data leakages?

There are many reasons data leakages can happen, but you can soften the blow and prevent them in the first place by integrating proper security practices across your entire organization. 

Human error or action 

In 2022, 82% of breaches were caused by intentional or accidental human actions. The likelihood of employees mishandling sensitive data is significant, where data is being transferred and accessed across departments. 

Accidental actions that cause data leaks: 

  • Neglecting to encrypt private email addresses or files before sending them to external parties 
  • Uploading sensitive information to a public cloud storage instead of a private cloud storage

However, data leakage can be intentional through the following means: 

  • Sharing access to secured documents with competitors for financial reward 
  • Deliberating making information publicly available  

Misconfigured infrastructure 

Data leakage can also occur from an oversight in your safeguard system. A misconfiguration is a mistake or error made during the setup or adjustment of your system that leads to performance issues and security vulnerabilities.   

This includes: 

  • Poorly configured repositories
  • Unprotected interfaces and application program interfaces (APIs) 
  • Not recognizing flaws in access control arising from insecure direct object references (IDOR) 
  • Insufficient data encryption and cross-site scripting 

Misconfigurations in your software can send data to the wrong place or leave sensitive information unprotected. 

Weak endpoint security 

Weak endpoint security can lead to data leakage through vulnerabilities on individual devices connected to your network. These gaps compromise a single device's security and expose your entire network.  

This could include: 

  • Lack of proper encryption protocols 
  • Failure to update endpoint software and apply security patches 
  • Allowing employees to use their personal devices to access company files 
  • Insufficient management, detection, and response (MDR)

Strengthening endpoint security is particularly important in business environments where data transfers across devices, such as a company tablet or computer, to a server. 

3 expert tips on identifying and preventing a data leakage (with examples)

The most effective way to identify and prevent data leaks is to set up a security system that automatically detects and monitors for anomalies.

Use an advanced threat monitoring and intrusion detection system 

A cybersecurity solution monitors network traffic for suspicious activities continuously. 

This solution will use:  

  • A firewall that identifies external sources trying to access your data and prevents them from breaching your defenses 
  • Antivirus software to detect software bugs or malware that could result in a data leak and prevent them from infiltrating your network 

For example, our ThreatDown utilizes IDS with SOC. 

Use behavior analytics and insider threat detection

One of the most effective ways to pinpoint where data leaks originate is to use a user behavior analytics (UBA) and insider threat detection tool. 

A UBA will: 

  • Use contextual analysis to determine if a user’s activity is abnormal or outside their scope
  • Provide your security team with real-time alerts about any suspicious behavior

UBA software will provide specific insights into user activities to discern which behaviors pose a risk to your data. 

Invest in a storage area network to centralize sensitive data   

A storage area network (SAN) is a specialized network that allows multiple independent servers to access the same centralized, block-level data storage. This setup helps protect against data leakage by implementing monitoring systems and strong access prevention measures. 

A sophisticated SAN: 

  • Isolates storage traffic from regular network traffic to limit your data’s exposure to third parties 
  • Offers advanced security features, like encryption and access and authentication codes  

For example, our SAN offers Managed File Replication automatically creates duplicate versions of your data across multiple storage devices. This ensures your data remains protected, even during an unforeseeable event like hardware failure. 

What is the difference between data leakage and a data breach? 

The terms ‘data leakage’ and ‘data breach’ are often used interchangeably but have slightly different meanings.

A data breach involves an external party deliberately infiltrating a secure system. Typically, cybercriminals try to gain unauthorized access to confidential material, such as financial records, or execute ransomware attacks. 

For example, the 2023 social engineering attack on Mailchimp is considered a data breach. Their security team identified an unauthorized actor accessing one of their tools. They found that the actor tried to access 133 Mailchimp accounts using employee credentials. 

Mailchimp's next steps to rectify the problems included temporarily suspending access for Mailchimp accounts and notifying the primary contracts of all affected accounts within 24 hours of the incident. 

Conversely, data leakages can be intentional or unintentional, often stemming from internal oversights, human error, or vulnerabilities in your operating system or software. 

A prime example is when a bug in ChatGPT‘s Redis client open-sourced library made some users’ chat history accessible to the public. 

ChatGPT remediated this through the following steps:

  • Took ChatGPT offline to minimize damage 
  • Patched up the bug and run tests to ensure it won’t happen again 
  • Added redundancy checks and improved logging processes 

Stop data leakage before it starts  

Data leakage can wreak havoc on a data-driven business. 

Threats like human error or malicious insider threats can expose your data to social engineering attacks from external sources. 

That’s why we believe understanding what data leakage is will help you, as proactive intervention is the best loss data prevention.  

That’s why we offer a VMware private cloud system that provides a secure firewall and DDoS protection. This allows us to identify data leakage when it’s a drop, not a flood.  

We also provide general hosting plans to help you scale your business. Chat with us today about finding a perfect fit for your hosting needs.