What Is Personally Identifiable Information (PII)?

Our online activities constantly generate personal information that is collected, processed, and shared by organizations, companies, and, in some cases, malicious actors. This data, known as Personally Identifiable Information (PII), has become a highly valuable asset, often used for marketing, identity verification, or targeted services.

Alarmingly, in 2023, more than 52% of global data breaches involved the exposure of customer PII, making it the most frequently compromised type of information. This statistic underscores the growing vulnerability of sensitive personal data and the urgent need to understand what qualifies as PII and how to protect it effectively.

What Is Personally Identifiable Information (PII)?

What Is Considered PII? Examples of Personally Identifiable Information

Personally Identifiable Information (PII) covers a wide range of data points that can directly or indirectly identify an individual. Some of this information is classified as sensitive PII—data that poses a high risk if exposed—while other details are considered non-sensitive PII, which may carry less risk but can still be used to identify someone when combined with other data.

Here are common examples of PII:

• Identifiers: Full names, Social Security Numbers (SSNs), passport numbers, driver’s licenses, and financial account numbers.
• Contact Information: Home addresses, personal or work email addresses, and phone numbers.
• Location Data: IP addresses, GPS coordinates, and other digital location trails.
• Biometric Data: Fingerprints, facial recognition data, iris scans, and voiceprints.
• Health Information: Medical records, health insurance details, or patient identification numbers.

What Are the Three Classifications of PII?

Not all personally identifiable information carries the same level of risk. Some data points are considered routine, while others qualify as highly sensitive information that could cause serious harm if exposed. To better manage security and compliance, PII is generally divided into three main classifications:

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. Because of the high level of risk, sensitive PII requires the strongest safeguards and is often subject to strict regulatory standards.

2. Confidential PII

Confidential PII covers information that may not cause direct harm on its own but still requires protection due to privacy concerns. Examples include email addresses, phone numbers, or dates of birth. While a breach of this data might result in fewer immediate consequences, it can still fuel fraud attempts or enable social engineering, so organizations typically secure it with measures like encryption.

3. High-Risk Data

High-risk data falls in between, as it may or may not qualify as sensitive but still plays a critical role in operations and compliance. This category includes employee records, internal IDs, or customer account details. Mishandling high-risk data can compromise privacy or disrupt business activities, making it essential to apply appropriate safeguards.

How Is Personally Identifiable Information (PII) Collected?

Understanding the classifications of PII is only half the picture. To protect sensitive information effectively, it’s important to know how organizations, governments, and even bad actors collect it in the first place. Personally Identifiable Information can be gathered through many different channels, each carrying its own privacy and security risks. For instance it can be:

1. Directly From Individuals: The most straightforward collection method is when people provide their own PII. This may happen through online forms, in-person applications, customer service calls, social media accounts, or paper records.
2. Through Online Activities: Every online interaction leaves a digital footprint. Browsing history, login credentials, IP addresses, email addresses, and payment information all qualify as PII. Companies use this data to track behavior, personalize services, and improve customer experiences.
3. From Surveillance Cameras: Video surveillance in public spaces or private facilities captures images, timestamps, and location data. With facial recognition and other advanced technologies, this footage can directly identify individuals, raising important privacy considerations.
4. From Public Records: Governments maintain large repositories of PII through voter rolls, court filings, property deeds, and other public records. These documents often contain sensitive personal details such as names, addresses, and birthdates, which can be accessed legally but also exploited if not safeguarded.
5. From Devices and Sensors: Smartphones, wearables, and IoT devices constantly generate PII, from health metrics on fitness trackers to GPS data on navigation apps. This continuous data stream can reveal highly personal patterns of behavior.
6. From Third-Party Sources: Data brokers aggregate personal information from multiple sources, including online activity and commercial transactions. These detailed profiles are sold to marketers and other organizations, often without the individual’s full awareness or consent.
7. From Unethical Hackers: Cybercriminals actively target PII through phishing, spyware, malware, and other attacks. Once stolen, sensitive information is often sold on the dark web, fueling identity theft and financial fraud.

What Is PII Used?

Personally Identifiable Information (PII) is more than just data sitting in a database—it’s actively used to power many of the services people interact with every day. Whether you’re applying for a loan, filling a prescription, or accessing your tax records, some form of PII is almost always required. Understanding how organizations rely on this information helps explain why protecting it is so important.

Here are the primary ways PII is used across different sectors:

1. Identity Verification

Financial institutions and many organizations depend on PII during Know Your Customer (KYC) checks. This is vital for meeting anti-money laundering (AML) regulations and preventing crimes such as terrorism financing and fraud. A common example is opening a bank account, which typically requires presenting a government-issued ID or Social Security Number to confirm identity.

2. Personalized Marketing

Businesses use PII and other sensitive information to better understand customer behavior. By analyzing data such as purchase history, email engagement, or browsing patterns, companies can personalize services, recommend products, and target advertisements more effectively. This tailored approach improves engagement and drives higher sales.

3. Business Operations

PII is the foundation of everyday business activities. From managing customer relationships to providing technical support, organizations rely on accurate personal data to operate efficiently. Without access to reliable PII, many companies would struggle to deliver consistent service or maintain trust with their customers.

4. Healthcare

Healthcare providers collect and manage PII to maintain patient records, deliver treatments, and process insurance claims. Because health-related data is classified as sensitive PII, it is subject to strict protections such as HIPAA in the United States. Even a routine doctor’s appointment often requires sharing identifiers like date of birth and insurance details.

5. Employment

Employers rely on PII to verify applicants, conduct background checks, and manage payroll and benefits. Sensitive employee information also ensures compliance with workplace regulations and labor laws. For example, tax filings and healthcare benefits both require accurate employee data.

6. Government Services

Governments use PII extensively to administer essential services. From issuing passports and driver’s licenses to confirming eligibility for social benefits, PII is central to how public programs function. This makes government databases frequent targets for cybercriminals, underscoring the need for strong protections.

7. Law Enforcement

Law enforcement agencies use PII—such as fingerprints, DNA, and surveillance footage—to identify suspects, investigate crimes, and protect public safety. Because this type of sensitive information can directly link individuals to criminal activity, it is one of the most critical applications of PII.

8. Education

Schools and universities use PII to manage student enrollment, maintain academic records, and provide educational services. Protecting student data is essential for safeguarding privacy, especially as institutions adopt digital platforms for grading, communication, and online learning.

Consequences of Mishandling Personally Identifiable Information (PII)

While PII provides value for businesses, governments, and everyday services, it also carries significant risk if misused or exposed. Mishandling can occur through cyberattacks, careless data storage, or even companies over-collecting and selling information without transparency.

The potential consequences include:

• Misuse of Data: Mishandled PII can be exploited for fraudulent activities, unauthorized transactions, or impersonation schemes. Even when used by legitimate organizations, practices like excessive profiling or undisclosed third-party sharing can strip individuals of control over their own information.
• Personal and Professional Harm: The fallout of a data leak often goes beyond finances. Individuals may face stress, reputational damage, or even threats to personal safety, while organizations risk lawsuits, regulatory fines, and long-term erosion of public trust.
• Rising Data Breaches: Breaches are growing in both scale and frequency. A 2023 Identity Theft Resource Center report revealed a 14% increase over the previous record, with more than 66 million people affected. This trend underscores how sensitive information remains a prime target for exploitation when not properly secured.

When PII is mishandled, the damage reaches beyond individuals to the wider economy, disrupting services, weakening trust in digital systems, and exposing gaps in how personal data is safeguarded.

Best Practices for Protecting Personally Identifiable Information (PII) in Organizations

Protecting personally identifiable information (PII) is critical for every organization that collects, processes, or stores sensitive information. Mishandling PII can lead to severe consequences, from costly data breaches to reputational damage and regulatory penalties. To safeguard both customers and business operations, organizations should adopt these proven strategies for effective PII management:

1. Identify All PII

Conduct a full audit of all personal information your organization holds. This includes databases, shared drives, backup systems, and contractor platforms. Identifying every instance of PII—and understanding its sensitivity—provides a foundation for strong protection.

2. Limit Use and Retention

Only collect and store the PII that is essential for business operations. Holding unnecessary data increases the risk of exposure if a breach occurs. Establish clear retention policies to minimize storage of outdated or irrelevant personal information.

3. Classify PII by Sensitivity and Risk

Not all PII carries the same level of risk. Classify data as low, moderate, or high impact based on the potential harm if compromised. For example, financial and biometric data require stricter safeguards than basic contact details.

4. Apply Strong Safeguards

Protect PII with layered security measures such as encryption, multi-factor authentication (MFA), access controls, and continuous monitoring. The higher the sensitivity of the information, the more robust the protection should be.

5. Foster Cross-Department Collaboration

PII protection isn’t just an IT responsibility. Legal, compliance, and operations teams must work together to ensure consistent security practices across the organization.

6. Provide Ongoing Training and Awareness

Employees are often the first line of defense. Regular training ensures staff understand how to handle PII, recognize phishing attempts, and follow organizational policies to reduce human error.

7. Secure Third-Party Relationships

Vendors and service providers that access PII must follow the same data protection standards as your organization. Establish strict contracts and perform regular security audits to prevent weak links in the supply chain.

8. Ensure Regulatory Compliance

Adhere to data protection laws and frameworks such as GDPR, CCPA, and HIPAA. Compliance not only helps avoid legal penalties but also strengthens customer trust in how their sensitive information is managed.

How Individuals Can Protect Their Personally Identifiable Information (PII)

Protecting PII isn’t just the responsibility of organizations—individuals also play a critical role in keeping their sensitive information secure. Here are practical steps anyone can take:

• Use Strong Authentication: Rely on strong, unique passwords for every account. Add Two-Factor Authentication (2FA) wherever possible to prevent unauthorized access, even if your password is stolen.
• Secure Your Devices: Keep phones, laptops, and tablets updated with the latest security patches. Install antivirus software, enable firewalls, and avoid using public Wi-Fi for activities involving sensitive information, such as online banking.
• Be Careful What You Share: Think twice before sharing personal details. Only provide PII to trusted organizations for legitimate reasons. For example, don’t share your Social Security number unless it’s absolutely required.
• Adjust Privacy Settings: Review permissions on apps, browsers, and social media platforms. Limiting what apps can access—such as location data or contact lists—reduces unnecessary exposure.
• Stay Educated on Threats: Cybercriminals are constantly evolving their tactics. Staying up to date on phishing scams, social engineering tricks, and common fraud schemes can help you spot risks before they affect you.

Key Regulations Protecting PII and Sensitive Information

Organizations that collect or process PII must comply with strict data protection regulations. These frameworks establish standards for securing sensitive information and give individuals greater control over their personal data:

• The Privacy Act of 1974 (U.S.): Governs how federal agencies collect, use, and disclose PII.
• OMB Memoranda: Provides federal agencies with detailed guidelines for PII protection, including emerging threats.
• HIPAA (U.S.): Requires healthcare providers to safeguard patient health information and ensure data confidentiality.
• Gramm-Leach-Bliley Act (GLBA, U.S.): Mandates that financial institutions protect sensitive consumer data and disclose their information-sharing practices.
• California CCPA and CPRA: Grant residents the right to know what data companies collect, opt out of sharing, and request deletion. The CPRA strengthened enforcement through the California Privacy Protection Agency (CPPA).
• GDPR (EU): One of the strictest privacy frameworks globally, GDPR provides EU citizens extensive rights over their personal data, including access, correction, and erasure.
• UK Data Protection Act 2018: Aligns with GDPR standards to ensure lawful, fair, and transparent handling of PII after Brexit.

Conclusion 

Personally Identifiable Information has become one of the most valuable assets in the digital economy, and the way it is protected will define the level of trust people place in technology.

For individuals, protection means more than caution. It involves choosing services that respect privacy, practicing strong security habits, and staying alert to how personal data is used. For organizations, responsibility goes beyond compliance. It requires building systems with privacy at the center, adopting advanced safeguards like zero-knowledge proofs, and treating transparency as a way to earn trust.

Looking forward, the companies and platforms that succeed will be those that not only secure sensitive information but also give people meaningful control over their data. Safeguarding PII goes beyond minimizing risks. It lays the groundwork for a future where people can interact online with confidence, supported by systems that protect their privacy and respect their control over personal information.

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.