The news: The personal data of more than 7 million Robinhood customers was compromised during a massive data breach at the trading platform November 3.

More on this: An unauthorized third party reportedly “socially engineered a customer support employee by phone” and gained access to customer support systems, per Robinhood. Social engineering uses deception and manipulation to get people to divulge confidential information, leading to access to internal systems. 

• The attacker was able to get a list of email addresses for approximately 5 million people and full names for a separate group of 2 million.
• For a smaller group of 310 people, additional personal information, including names, dates of birth, and ZIP codes, was also exposed. “More extensive account details” were exposed for about 10 customers.
• Robinhood, which has 18.9 million active monthly users, said no customers have had a “financial loss” due to the incident; the company uses data aggregator Plaid to connect to users' bank accounts.
• Robinhood said the unauthorized third party sought an “extortion payment,” and the company notified law enforcement but did not say whether it had made any payments.

The bigger picture: Robinhood’s breach through social engineering exposes potential weaknesses in customer support departments. Would-be hackers can gain access to a business’s customer support systems, where vital personal data is stored. 

• The ransomware attack reveals that data in a secure and distributed service or app can be compromised, exposing the fact that people can be the weakest link in cybersecurity.
• Personal user data can be held hostage in ransomware attacks or sold to identity thieves.
• The average cost of a data breach had been $3.8 million since 2015, per IBM, but has risen 15% to $4.4 million since the pandemic began. 

Dive deeper: Read how the Robinhood data breach won’t help falling trading volume in our Fintech Briefing.