What Is Personally Identifiable Information (PII)?

In today’s increasingly digital world, our online activities leave a trail of personal information that is collected, processed, and shared by organizations, companies, and even malicious individuals. This data, known as Personally Identifiable Information (PII), has become a valuable commodity, often used for marketing or identity verification. Alarmingly, in 2023, more than 52% of all data breach incidents globally involved the exposure of customer PII, making it the most frequently breached type of data. This highlights the increasing vulnerability of sensitive personal information in today’s digital landscape. Therefore, it is crucial to understand what constitutes PII and take appropriate measures to protect it.

What Is Personally Identifiable Information (PII)?

What Is Considered PII? Examples of Personally Identifiable Information

PII can include both direct identifiers and indirect identifiers that, when combined with other information, can identify an individual. Below are common examples of PII:

• Identifiers: Full names, Social Security numbers, passport numbers, driver’s licenses, financial account numbers.
• Contact Information: Home addresses, email addresses, phone numbers.
• Location Data: IP addresses, GPS coordinates.
• Biometric Data: Fingerprints, facial recognition, voiceprints.
• Health Information: Medical records, health insurance information.
• Financial Information: Bank account details, credit card numbers.

What Are the Three Classifications of PII?

Personal Identifiable Information (PII) is divided into three primary classifications based on the sensitivity and risk associated with the data:

1. Sensitive PII

Sensitive PII includes information that, if exposed, could lead to severe harm, such as identity theft or financial fraud. Examples include Social Security numbers, passport numbers, biometric data, and financial account numbers. Due to its high-risk nature, sensitive PII requires the highest level of protection and is often subject to strict regulatory standards.

2. Confidential PII

Confidential PII encompasses information that is not inherently harmful but should still be protected due to privacy concerns. Examples include email addresses, phone numbers, or date of birth. While exposure of this data might not lead to severe consequences, it can still lead to privacy violations or minor fraudulent activities. It is often handled with precautionary measures like encryption.

3. High-Risk Data

High-risk data is information that may or may not be considered sensitive but is still crucial for compliance and operational security. This classification includes data that could impact an individual’s privacy or a company’s operations if mishandled. Examples include employee records, internal IDs, or customer account details. While not as immediately damaging as sensitive PII, high-risk data still requires adequate safeguarding measures.

How Is Personally Identifiable Information (PII) Collected?

Collecting Personally Identifiable Information (PII) is essential for various business, legal, and personal transactions, but it also introduces significant privacy and security risks. PII can be collected through multiple channels, including:

1. Directly From Individuals

PII is often provided directly by individuals through various methods such as online forms, face-to-face interactions, phone calls, social media platforms, and paper forms. This direct input makes it easy for businesses and organizations to gather key personal data.

2. Through Online Activities

As people engage in online activities—interacting on social media, browsing websites, or making purchases—they leave behind a digital footprint. This footprint includes IP addresses, browsing history, login credentials, email addresses, phone numbers, and payment and shipping information. These data points are valuable for businesses to track user behavior, personalize services, and enhance customer experience.

3. From Surveillance Cameras

Surveillance cameras in public spaces or business premises capture PII in the form of images, location data, and timestamps. With advancements in technology, facial recognition systems can further identify individuals in these images, increasing the scope of PII collection through surveillance.

4. From Public Records

Governments collect and maintain PII through public records for social, legal, or administrative purposes. Examples include court records, voter registration lists, and property records. These documents often contain sensitive information such as names, addresses, birthdates, criminal records, marriage certificates, and employment history.

5. From Devices and Sensors

Smartphones, wearable technology, and Internet of Things (IoT) devices collect PII by tracking activity data, location information, and biometric details. Devices like fitness trackers or smartwatches continuously monitor users’ movements, health metrics, and interactions, providing another layer of data that can identify individuals.

6. From Third-Party Sources

Data brokers collect, aggregate, and sell personal data obtained from various sources, such as online activity, public records, and commercial transactions. These third parties often provide detailed profiles that include purchasing behavior, interests, and demographic information.

7. From Unethical Hackers

Hackers use methods like spyware, viruses, backdoors, and social engineering to steal PII from individuals, businesses, governments, and other organizations. Cyberattacks targeting sensitive data can result in significant security breaches and identity theft.

What Is PII used for?

Personally Identifiable Information (PII) plays a crucial role in various aspects of modern life, serving multiple purposes across different sectors:

1. Identity Verification: Financial institutions and other organizations use PII to verify their customer’s identities during Know Your Customer (KYC) processes. This is important for complying with anti-money laundering (AML) regulations and preventing terrorism financing and other financial crimes.
2. Personalized Marketing: Businesses leverage PII to tailor their offerings to individual users and target marketing efforts more effectively. By analyzing PII, companies can deliver personalized experiences and advertisements that resonate with specific audiences.
3. Business Operations: Many organizations rely on PII to manage day-to-day operations and deliver services to customers. This includes everything from customer relationship management to service provision and support.
4. Healthcare: Healthcare providers collect and use PII to manage patient records, provide treatments, and bill insurance companies. PII in healthcare is crucial for patient privacy and compliance with healthcare regulations, such as HIPAA in the United States.
5. Employment: Employers use PII to verify the identities of job applicants, conduct background checks, and manage employee records. PII is also essential for processing payroll, administering benefits, and ensuring compliance with labor laws.
6. Government Services: Governments utilize PII to provide citizens with essential services such as passports, driver’s licenses, and social security cards. PII is crucial for verifying identities, determining eligibility, and administering social benefits.
7. Law Enforcement: PII, such as fingerprints, DNA, and surveillance data, is used in criminal investigations to identify and track suspects. This data is crucial in solving crimes and ensuring public safety, helping law enforcement agencies maintain order.
8. Education: Educational institutions use PII to manage students’ academic records, track progress, and provide necessary educational services.

Consequences of PII Falling Into the Hands of Criminals

The widespread collection and use of Personally Identifiable Information (PII) are essential in today’s digital society, but when this sensitive data falls into the wrong hands, the consequences can be severe. These include:

• Misuse of Data: Criminals can exploit PII for fraudulent activities, such as obtaining prescription drugs, filing false tax returns, claiming benefits, traveling across borders, receiving medical treatment, seeking employment, and committing various other illegal acts.
• Personal and Professional Harm: The misuse of PII can result in significant personal and professional damage. Individuals may suffer from embarrassment, financial loss, emotional distress, and even risks to their personal safety. Professionals such as doctors, pharmacists, or other service providers could experience irreparable reputational damage, and organizations might face public trust loss, legal liabilities, and costly remediation efforts. Moreover, affected individuals may have their benefits suspended or terminated due to fraud.
• Escalating Data Breaches: The scale of data breaches continues to grow, as highlighted by a 2023 report from the Identity Theft Resource Center, which revealed a record high in data breaches. The report noted a 14% increase over the previous record, resulting in 733 compromises that affected more than 66 million victims. This alarming trend underscores the urgency for individuals and organizations to adopt robust measures to protect PII from falling into the wrong hands.

The consequences of compromised PII are far-reaching, impacting not only the individuals affected but also the broader systems and institutions that rely on trust and security.

Effective Strategies for Securing Personally Identifiable Information (PII) in Organizations

Here are some best practices for effective PII management in organizations:

• Identify All PII: Conduct a comprehensive audit of all personal information your organization holds. This includes data stored in databases, shared networks, backup systems, and contractor sites. Identify all instances of PII and assess their level of sensitivity.
• Limit Use and Retention: Only collect, use, and retain PII that is necessary for specific business goals. Avoid accumulating excessive or irrelevant personal data to minimize exposure in case of a breach.
• Categorize PII by Impact Level: Classify PII based on its impact level—low, moderate, or high. This classification should reflect the potential harm to individuals and the organization if the data is accessed, used, or disclosed without authorization.
• Apply Appropriate Safeguards: Implement security measures that align with the sensitivity of the PII. Higher sensitivity data should have more robust protection, such as encryption or multi-factor authentication (MFA).
• Coordinate Among Relevant Experts: Encourage collaboration among IT, legal, and compliance teams to ensure comprehensive protection of PII. Each department plays a critical role in safeguarding sensitive data and adhering to regulatory requirements.
• Provide Ongoing Training and Education: Raise awareness about the importance of PII protection and the organization’s policies through continuous training programs for staff.
• Manage Vendors and Third-Party Service Providers: Implement strict policies for managing vendors and third-party service providers that handle PII. Ensure these partners adhere to the same data protection standards to prevent external breaches.
• Ensure Legal Compliance: Adhere to all relevant laws and regulations governing the protection of PII, such as the GDPR or CCPA, to avoid legal penalties and protect consumer trust.

Online Steps to Protect Your Personally Identifiable Information (PII)

To protect your Personally Identifiable Information (PII) online, consider implementing the following steps:

• Use Strong Authentication: Ensure that you use strong, unique passwords for all accounts and devices. Whenever possible, enable Two-Factor Authentication (2FA) for an added layer of security.
• Secure Your Devices: Make sure your devices are secured with firewalls, antivirus software, and regular software updates. Avoid using public Wi-Fi networks for sensitive activities like online banking or accessing confidential information.
• Be Mindful of What You Share: Be cautious when sharing PII, both online and offline. Only provide it to trusted sources for legitimate purposes and avoid sharing sensitive details like Social Security numbers or financial information unless absolutely necessary.
• Control Data and Privacy Settings: Pay attention to the PII you disclose online and review the permissions granted to apps and websites. Opt out of data collection or sharing when possible to limit exposure.
• Stay Informed: Stay updated on the latest online threats, scams, and best practices for protecting PII. Follow reliable sources, such as reputable security websites or government agencies, to stay informed and protected.

Regulations Governing PII Data Protection

Organizations handling Personally Identifiable Information (PII) must comply with a complex web of domestic and international laws. Key regulations include:

• The Privacy Act of 1974: This U.S. federal law governs the collection, maintenance, use, and dissemination of PII by federal agencies. It establishes stringent guidelines to protect individual privacy.
• OMB Memoranda: The Office of Management and Budget (OMB) issues memoranda providing detailed instructions to federal agencies on PII management and protection, often addressing emerging threats and technologies.
• The Health Insurance Portability and Accountability Act of 1996 (HIPAA): Designed for the healthcare industry, HIPAA mandates the protection of sensitive patient information, ensuring confidentiality and security, especially for electronic data.
• The Gramm-Leach-Bliley Act (GLBA): This U.S. law requires financial institutions to disclose information-sharing practices to customers and implement robust safeguards to protect sensitive data.
• The California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA): These California laws empower residents with control over their personal information collected by businesses. The CPRA, an expansion of the CCPA, introduced stricter data protection measures and established the California Privacy Protection Agency (CPPA) as the enforcement body.
• General Data Protection Regulation (GDPR): GDPR mandates stringent data protection measures for companies processing personal data of EU citizens. Individuals have extensive rights over their data, including access, correction, and deletion.
• UK Data Protection Act 2018: The UK’s post-Brexit data protection law aligns closely with the GDPR, ensuring lawful, fair, and transparent processing of personal data.

Conclusion 

The importance of safeguarding Personally Identifiable Information (PII) cannot be overstated. While PII enables personalized experiences and services, it also poses significant risks if mishandled or exposed. As data breaches become more frequent, protecting PII is not only a legal obligation but also a critical aspect of maintaining trust in the digital ecosystem.

Individuals must remain cautious about what PII they share, ensuring it is provided only to trusted sources for legitimate purposes. It’s important to be aware of the potential risks when disclosing personal information, whether online or offline. At the same time, organizations must take responsibility for protecting PII, adopting robust security protocols, and being transparent about how they collect, use, and store personal data. Transparency about data practices and complying with privacy regulations are essential to building and maintaining public trust.

Identity.com

One of our pursuits as an identity-focused company is a user-centric internet, where users have control over their PII. More reason why Identity.com doesn’t take the back seat in contributing to this future via identity management systems and protocols, which will provide better collection and protection of PII from users. We also belong to the World Wide Web Consortium (W3C), the standards body for the World Wide Web.

The work of Identity.com as a future-oriented company is helping many businesses by giving their customers a hassle-free identity verification process. Identity.com is an open-source ecosystem providing access to on-chain and secure identity verification. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Please get in touch or visit our FAQs page for more info about how we can help you with identity verification and general KYC processes.