What are Third-Party Data Breaches & How to Stay Safe by Preventing it?

Data breaches are a constant worry due to frequent news reports. As per the IBM/Ponemon Institute report, the mean overall expense spent due to data breaches in 2023 was $4.45 million. Third-party breaches are especially scary among the many cybersecurity risks companies deal with. 

A third-party data breach occurs when someone sneaks into a company's systems through a vendor and steals relevant data. Okay, think of it like this: There's a store (Company A) that hires a delivery company (Company B) to bring in packages. In this case, a third-party data breach occurs when someone hacks into the delivery company's computers and takes client addresses and other shop information.

So, why are third-party data breaches concerning? Let's have a look into it:

• Cybercriminals target vendors, suppliers, or contractors.
• They gain unauthorized access to valuable customer data.
• Breach jeopardizes data integrity.
• Poses a significant threat to privacy and security.

As such, the gravity of third-party data breaches cannot be overstated. 

Significant data breaches caused by third-party vendors have affected 44% of the organizations polled, as per a 2019 eSentire report. Furthermore, the IBM Cost of a Data Breach Report highlights the financial consequences of third-party breaches. Therefore, this indicates that the engagement of a third party might shoot up expenditures by more than $370,000 on average, up to an intimidating $4.29 million.

Clearly, the stakes are high. Hence, the consequences are profound. So, how can individuals and companies shield themselves against third-party data breaches? 

Well, here's the thing: these breaches can happen even if you did everything right. But no worries! This blog will explore more about third-party data breaches and how to keep yourself safe online. Let's get you protected!

Why Are Third-Party Data Breaches Increasing?

Third-party data breaches are on the rise. Thus, it comes with many threats to both businesses and individuals alike. Here are several reasons behind this alarming trend:

• Increased Interconnectedness: More interconnected systems create more entry points for hackers.
• Complex Supply Chains: Complex supply chains increase vendor access to sensitive data, raising breach risks.
• Insufficient Security Measures: Third-party vendors often lack strong security measures, making them easy targets.
• Lack of Oversight: There's often inadequate oversight of third-party vendors' security practices.
• Human Error: Human error by third-party vendor employees remains a major breach factor.

Thus, the surge in third-party data breaches underscores the urgent need for businesses to prioritize cybersecurity measures not only within their organizations but also across their extended network of partners and vendors.

Examples of Third-Party Breaches

Third-party breaches illustrate how interconnected our digital ecosystems are and highlight the importance of robust cybersecurity measures for all parties involved. Let's look into some examples:

1. Microsoft Midnight Blizzard Attack

Microsoft's security team scrambled to stop a major attack in January 2024 by Midnight Blizzard, a notorious Russian hacking group. The attack compromised email accounts and data across US government agencies and businesses, with hackers snatching a staggering 60,000 emails from just the State Department.

Data Compromised:

• Email accounts
• Sensitive data from US government agencies
• Business communications
• Approximately 60,000 emails from the State Department

2. American Express Data Breach

American Express slammed the brakes on a data breach in March 2024 after a third-party merchant processor they work with was hacked. The breach disclosed sensitive customer information, including credit card numbers, names, and expiration dates. American Express is working to contain the fallout even though the particular merchant processor hasn't been named.

Data Compromised:

• American Express card account numbers
• Cardholder names
• Card expiration dates
• Other sensitive card information

3. Mercedes-Benz Data Breach

Mercedes-Benz supplier in 2021 was subject to a cloud storage blunder. Hence, this triggered a data leak that exposed personal information of over a million people. The breach leaked customer and potential buyer data from Mercedes-Benz websites affecting records from 2014 to 2017. However, everyone on the record was in fact not impacted by this data breach. But, 1,000 individuals had their sensitive information compromised. This incident highlights the importance of companies securing their entire supply chain, not just their internal systems.

Data Compromised:

• Full names
• Emails
• Phone numbers
• Driver’s license numbers
• Credit card information
• Birth dates
• Data regarding purchased vehicles

4. Marriott Breach

Marriott bought Starwood in 2006. However, it also inherited a big problem as hackers had broken into Starwood's systems in 2014. They stayed hidden for years until they were finally discovered in 2018. That wasn't the end of it though. Franchise owners stole access to Marriott's corporate systems in 2020, affecting over 5 million customer accounts in a separate breach.

Data Compromised:

• Names
• Addresses
• Phone numbers
• Birth dates
• Email addresses
• Encrypted credit card details
• Passport numbers
• Travel histories
• Loyalty card information

These examples bring to the light the critical need to track third-party entities in your ecosystem. Vulnerabilities in a third party can lead to significant breaches even if systems might remain secure. Thus, this will in turn affect your data along with operations. 

So, here’s what can be done: Stay vigilant and guarantee robust cybersecurity measures across all partnerships.

Best Practices for Preventing Third-Party Security Breaches 

There’s no room for doubt that protecting your organization from third-party security breaches is crucial. Vendors and partners can inadvertently become gateways for cyberattacks. As such, this makes it essential to implement powerful security measures. 

Here are some best practices to safeguard your business against these risks.

1. Assess Your Vendors Before Onboarding

It's vital to conduct a thorough assessment of their security posture before bringing any vendor on board. Hence, this process should include penetration testing to look into their defenses against potential attacks. Apart from this, you must also ensure that the vendor follows industry-standard security practices and is capable of safeguarding your sensitive information. This initial test helps in identifying any weaknesses that could expand your attack surface management efforts.

How to do it:

• Conduct background checks on potential vendors.
• Test vendor systems for vulnerabilities.
• Analyze vendor security policies and procedures.
• Ensure the vendor meets industry standards (e.g., ISO 27001, GDPR).
• Request and review security audits or certifications.

2. Measure Fourth-Party Risk

Don't stop at assessing your direct vendors. It's equally important to understand the security risks posed by their vendors, known as fourth parties. Thus, this layer of evaluation is often overlooked but can significantly affect your overall vendor risk management strategy. You can also gain insight into the broader ecosystem and can implement safeguards to mitigate these extended threats by measuring fourth-party risk.

How to do it:

• Ask vendors to identify critical sub-vendors.
• Assess fourth-party security practices.
• Get security docs & certifications from sub-vendors.
• Include 4th-party risks in vendor assessments.
• Use tools to monitor 4th-party risks.

3. Incorporate Risk Management into Your Contracts

It is essential to include clauses related to risk management when drafting contracts with vendors. Thus, you should outline the security measures and protocols they must adhere to, ensuring they align with your organization's standards. This contractual obligation ensures that vendors are legally bound to maintain a certain level of security. As such, this limits the likelihood of a third-party breach.

How to do it:

• Specify security standards & compliance (PCI DSS).
• Require regular security assessments by qualified vendors.
• Mandate immediate notification of any security incidents or breaches.
• Define penalties for non-compliance with security measures.
• Specify data protection and privacy obligations.

4. Continuously Monitor Vendors for Security Risks

Vendor security is not a one-time check but an ongoing process. Thus, you can implement continuous monitoring to stay updated on your vendors' security status. This can be accomplished by utilizing tools that provide real-time information into potential vulnerabilities and threats. Consequently, you are able to cope with problems as soon as they emerge and decrease the chance of   a security incident impacting your business.

How to do it:

• Continuously monitor vendor networks with automated tools.
• Schedule regular security audits for vendors.
• Track vendor compliance with security policies.
• Stay informed about vendor security threats.
• Set up alerts for vendor security changes.

5. Collaborate With Your Vendors

Establish open communication channels with your vendors to promote a collaborative approach to security. As such, you must regularly share information about emerging threats and best practices. This partnership can enhance your collective defense mechanisms, making it harder for cybercriminals to exploit any weaknesses.

How to do it:

• Schedule regular security meetings with vendors.
• Share threat intel and best practices.
• Collaborate on security training.
• Develop joint incident response plans.
• Promote a continuous security improvement culture among vendors.

How ResilientX Can Help Prevent Third-Party Data Breaches

Protecting your organization from third-party data breaches starts with choosing the right partner. ResilientX is a Unified Exposure Management Platform that Unifies Attack Surface, Web, Network Security Testing, Cloud Security Automation and Third-Party Risk Management. We specialize in securing your data and keeping your business operations seamless. 

Here's why ResilientX stands out in the market for data protection:

• Comprehensive Risk Analysis

ResilientX looks deep with advanced analytics to offer thorough risk insights and due diligence. We help you spot vulnerabilities before they turn into threats.

• Automated Workflows

Our automated workflows simplify vendor management and remediation processes. This guarantees that your security measures are kept current while saving you time & money.

• Continuous Monitoring

We detect and address emerging threats in real-time with our continuous monitoring tools. This means your organization is protected 24/7.

Ready to protect your data? Get in touch with ResilientX today and let’s build a secure future together.

Final Thoughts 

Third-party data breaches are a growing concern. However,  you can significantly reduce your risk by following these best practices. This will protect your organization's sensitive information and reputation. Having said that, proactive measures are essential. So, don't wait until a breach occurs to take action. ResilientX can help you implement a comprehensive third-party risk management strategy with advanced analytics, automated workflows, and continuous monitoring. 
Stop worrying about security breaches. See how ResilientX can safeguard your systems with a free demo today.

FAQ

1. What is a third-party data breach?

A third-party data breach refers to a situation where hackers steal your data, not directly from the company you gave it to, but from a separate company that has access to your information through its business relationship with the first company. Imagine you share your credit card details with an online store. If hackers attack the payment processing company used by the store, they could steal your credit card information even though you never provided it to the payment processor directly.

2. How can I protect myself?

While complete control over shared data is difficult, some steps can help:

• Be cautious about who receives your information. Research companies before sharing personal details.
• Limit the information you share online. Avoid oversharing on social media or providing unnecessary details.
• Use strong passwords and avoid clicking suspicious links. This helps prevent hackers from directly accessing your information.

3. What should I do if I hear about a third-party data breach?

• Find out if you're affected. Most companies will notify you if your data was compromised.
• Change your passwords, particularly for the breached company and any accounts using the same password.
• Monitor your accounts for unusual activity, such as unauthorized charges or account changes.

4. Can I sue if my data is breached in a third-party incident?

The possibility of legal action depends on the specific situation. Consider consulting a lawyer if you believe a compromised data breach caused harm.

5. What's being done to prevent third-party data breaches?

Companies are implementing improved security practices and regulations to safeguard their systems and your data. You can also contribute by advocating for stricter data privacy laws.