Understanding what PII is and how to protect it
In the age of digital transformation and increased online presence, data privacy has taken centre stage, and the term Personally Identifiable Information (PII) has emerged as a crucial component in data security. While the general public may hear about PII in news reports on data breaches, only some truly understand what it means, what falls under its umbrella, and why protecting it is so important.
This article will comprehensively address PII, its various types, the differences between PII and other forms of personal data, and the best practices to protect this sensitive information. Additionally, we’ll explore the legal landscape surrounding PII, and the consequences businesses and individuals face in the event of data breaches.
What is PII?
At its core, personally identifiable information (PII) refers to any data that can be used to identify an individual. Whether directly or indirectly, if the information provides details that distinguish a person from others, it is considered PII. This includes more straightforward examples like full names, Social Security numbers, and email addresses, as well as indirect data such as IP addresses, location data, and cookies for tracking online activity.
The scope of what qualifies as PII can vary based on jurisdiction and regulatory frameworks, but the essence remains consistent: if data can pinpoint a specific individual, it requires protection.
Types of PII
PII can be broadly classified into two categories: sensitive and non-sensitive information. Each type requires different levels of protection and is treated differently under various data protection laws.
Sensitive PII
Sensitive PII includes information that, if exposed, could significantly harm an individual. This category typically covers:
- Social Security numbers
- Passport numbers
- Financial account numbers (bank or credit card)
- Biometric data (such as fingerprints or facial recognition data)
- Medical or genetic information
Sensitive PII requires more protection due to the potential damage it can cause when misused. For instance, a stolen Social Security number can lead to identity theft, financial fraud, or unauthorized access to critical resources.
Non-sensitive PII
On the other hand, non-sensitive PII includes information that is less likely to cause harm but still requires protection when combined with other data. Examples of non-sensitive PII are:
- Full names
- Email addresses
- Phone numbers
- Physical addresses
- Date of birth
Even though non-sensitive PII doesn’t pose immediate risks on its own, it can still be misused, especially when aggregated with other data, to create profiles of individuals. For example, combining an email address with location data can give insights into a person’s private life.
PII vs Personal Data
While PII is a familiar term in many legal contexts, the General Data Protection Regulation (GDPR) introduced a broader concept: personal data. The two terms are sometimes used interchangeably, but they are distinct.
As we’ve defined it, PII is limited to data that can directly identify a specific person. In contrast, personal data under GDPR encompasses a broader array of information. The GDPR covers direct identifiers like names and ID numbers and indirect identifiers like IP addresses, cookies, and device IDs. This distinction is important because, under GDPR, data that may not traditionally be classified as PII in other regions is still protected.
Another significant law, the California Consumer Privacy Act (CCPA), also emphasizes the protection of personal data. However, the CCPA is more closely aligned with PII than GDPR, defining personal information as anything that “identifies, relates to, describes, or could be linked with an individual.” The result is a varying legal landscape where businesses operating internationally must comply with different definitions of protected data.
Common Uses of PII
PII plays a crucial role in many aspects of personal and professional life. It is used extensively in business transactions, governmental processes, healthcare, and marketing. Some of the most common uses of PII include:
- Identity verification: When signing up for services, whether in healthcare or banking, PII confirms that an individual is who they claim to be. For instance, financial institutions often require PII such as Social Security numbers and identification documents to comply with Know Your Customer (KYC) regulations.
- Customer management: Businesses use PII to track customer interactions, preferences, and purchase histories. Retailers and service providers frequently store data like names, phone numbers, and email addresses to offer personalized experiences.
- Targeted marketing: Marketers use PII to segment their audience, creating targeted campaigns based on location, behavior, or demographic details. This practice, however, must comply with data protection laws, ensuring that PII is handled responsibly.
- Government services: Governments use PII to deliver public services, verify eligibility for benefits, and maintain records of citizens’ activities.
While PII facilitates many essential services, its misuse can lead to severe consequences for individuals, including identity theft, unauthorized access to personal accounts, and financial fraud.
Best Practices for PII Protection
The growing threat of cyberattacks and data breaches has underscored the need for robust PII protection. Organizations handling PII must adopt best practices to mitigate risks and comply with data protection regulations.
Encryption
Encryption is one of the most effective ways to protect PII. Encryption ensures unauthorized individuals cannot access sensitive information by converting readable data into an unreadable format. Data encryption should be applied at rest (when data is stored) and in transit (when data is transferred between systems). This prevents the interception of PII by malicious actors during data transmission.
Role-based Access Control (RBAC)
Role-based access control (RBAC) limits access to sensitive PII to only those who need it for their job functions. By restricting access, organizations can reduce the risk of internal threats and data leakage. Sensitive data should only be available to authorized personnel with a legitimate need to access it.
Data Anonymization and Pseudonymization
Anonymization and pseudonymization are techniques used to protect PII by removing or masking identifiable details. Anonymized data cannot be linked back to an individual, while pseudonymized data can only be re-identified if additional information is available. These techniques are instrumental when sharing data with third parties or conducting research.
Secure Data Storage
Ensuring the secure storage of PII is critical. Organizations must store PII in encrypted databases and use firewalls and intrusion detection systems to prevent unauthorized access. Additionally, regular security audits should be conducted to identify vulnerabilities in data storage systems and ensure that PII is always protected.
Data Minimization
The principle of data minimization requires organizations to collect only the PII necessary for a specific purpose. By limiting the amount of data collected and stored, businesses can reduce the risk of data breaches and ensure compliance with regulations that minimize personal data collection.
Regular Audits and Employee Training
Conducting regular data audits helps organizations assess their PII handling practices and identify areas for improvement. These audits can uncover unprotected data, outdated security measures, or unintentional data retention.
In addition to technical solutions, employee training is crucial for PII protection. All employees who handle PII must be trained on data protection best practices, security policies, and the consequences of mishandling sensitive information.
Companies and Business-Related PII
In a business context, companies routinely collect and manage a wide range of business-related PII from both employees and clients. Unlike personal PII, which relates strictly to private individuals, business-related PII encompasses information necessary for business transactions, regulatory compliance, and operational efficiency. This can include not only employee data but also customer information, vendor details, and even data related to business partners.
Employee PII
One major area of business-related PII is employee data. Companies need to collect sensitive PII from employees for payroll processing, benefits administration, and compliance with labor laws. This data often includes:
- Full names, addresses, and contact information
- Social Security numbers or other identification numbers
- Bank account information for direct deposits
- Medical records for health insurance coverage
- Taxpayer identification numbers for tax purposes
This information is essential for a company’s HR operations but must be tightly secured to prevent unauthorized access and potential breaches.
Customer PII
Customer-related PII is critical for retail, banking, and e-commerce businesses. Companies collect customer data to verify identity, process payments, and maintain customer relationships. The PII collected from customers often includes:
- Contact information, such as email addresses and phone numbers
- Payment card information
- Purchase histories
- Shipping addresses
- Account login credentials
Securely handling this data is crucial for maintaining customer trust and complying with regulations like the GDPR and CCPA. Companies also use this data for targeted marketing and personalization, but any mishandling of customer PII can lead to breaches, customer dissatisfaction, and legal penalties.
Vendor and Partner PII
In addition to employees and customers, businesses also collect PII from vendors and partners. This data is vital for managing contracts, processing payments, and ensuring legal and tax obligations compliance. Vendor and partner PII can include:
- Business contact information
- Tax identification numbers
- Bank account details for payments
- Records of transactions and contracts
Businesses must handle this data responsibly, mainly involving financial transactions or sensitive contracts.
The Legal Landscape Surrounding PII
Over the past decade, governments worldwide have implemented data protection laws to safeguard PII. Some of the most notable regulations include:
GDPR
The General Data Protection Regulation in the European Union is one of the world’s most comprehensive data protection laws. It mandates protecting personal data (including PII) and introduces strict penalties for non-compliance.
CCPA
The California Consumer Privacy Act grants California residents rights over their personal information, including the right to know what data is being collected, the right to request deletion of their data, and the right to opt out of the sale of their data.
HIPAA
The Health Insurance Portability and Accountability Act in the United States requires healthcare providers and other entities to protect PII, and compassionate data related to health and medical records.
These regulations require businesses to ensure that PII is collected, processed, and stored securely. Failure to comply with these laws can result in severe penalties, including hefty fines, reputational damage, and legal action.
PII Violations and Their Consequences
When organizations fail to adequately protect PII, the consequences can be devastating. Data breaches can lead to the theft of sensitive information, such as Social Security numbers and financial account details, which can be used for identity theft, fraud, and other malicious activities.
For businesses, the repercussions of a PII breach go beyond financial penalties. Companies that experience data breaches often face loss of customer trust, damage to their reputation, and reduced revenue. Additionally, the cost of addressing a breach—including legal fees, regulatory fines, and implementing more robust security measures—can be significant.
Under regulations like GDPR, businesses can be fined up to EUR 20 million or 4% of their global annual revenue, whichever is higher, for failing to protect PII. In the United States, companies that violate the CCPA can face fines of up to $7,500 per violation.
FAQs
How do companies ensure compliance with PII regulations?
Companies must develop a robust PII compliance framework, which includes regular data audits, encryption, and strict access controls. This process starts with identifying all PII collected, creating a comprehensive PII policy, and implementing secure handling practices. Regulations like GDPR and CCPA require companies to protect sensitive PII, be transparent about their data collection methods, and grant individuals access to their data upon request.
What steps should companies take to protect PII during data transfers?
Protecting PII during data transfers involves several key measures: encrypting the data, using secure transmission protocols like HTTPS and SFTP, and implementing access controls to restrict who can transfer the data. Data loss prevention (DLP) tools and regular audits also help ensure sensitive information remains secure in transit, preventing unauthorized access and mitigating risks.
What are the consequences of failing to protect PII?
Companies that fail to protect PII face significant consequences, including hefty fines under regulations like GDPR (up to €20 million or 4% of annual revenue) and CCPA (up to $7,500 per violation). Besides financial penalties, businesses may suffer reputational damage, loss of customer trust, and potential lawsuits. As seen in global data breach reports, data breaches can sometimes cost millions of dollars to rectify.
What types of PII are most at risk in companies?
Companies’ most at-risk types of PII include Social Security numbers, financial account details, and sensitive health information. Cybercriminals often target these high-risk data points due to their potential misuse in identity theft and financial fraud. Companies must take extra precautions, such as encrypting these data types and limiting access to only essential personnel.
How long should companies retain PII?
Companies should follow a data minimization principle, retaining PII only for as long as necessary for business purposes. Organizations must establish clear data retention policies, specifying how long different types of PII will be kept and the secure methods for disposing of data when it’s no longer needed, such as shredding paper records or wiping digital files from devices.
