Recently, Charles Schwab & Co. Inc. (“Charles Schwab” “Schwab”) announced that due to problems with the company’s email and chat program, certain messages containing customers’ personal and financial information were sent to external email addresses.

If you received a data breach notification, it is essential you understand what is at risk. More about our investigation into this breach, and what you can do if your data was stolen, is available here.

Last year, 1,862 data breaches affected more than 189 million people. On average, victims of identity theft spend 200 hours and over $1,300 recovering their identity. Many victims also suffer emotional distress, credit damage, and may even end up with a criminal record. Taking immediate action is the best way to prevent the worst consequences of a data breach.

What We Know So Far About the Schwab Data Breach

According to an official filing by the company, on December 16, 2021, Charles Schwab detected an issue with the company’s email and chat messaging programs. In response, Charles Schwab looked into the incident and discovered that between May 18, 2021 and December 16, 2021, certain email and chat messages sent through Schwab.com were sent to external email addresses.

Upon learning of the extent of the security breach, Charles Schwab then reviewed the affected messages to determine what information was compromised. While the compromised information varies based on the consumer, it may include your name, Social Security number or tax identification number, driver’s license or other state identification number, passport number, or username/password.

On March 23, 2022, Charles Schwab began sending out data breach notification letters to all individuals whose information was compromised as a result of the recent data security incident.

Charles Schwab is one of the largest financial services companies in the United States, managing more than $7.69 trillion in assets. The company hosts more than 33.4 million brokerage accounts and averages 6.1 million trades each day. In addition to brokerage services, Charles Schwab also offers traditional banking products online and through its retail banks. Charles Schwab was founded in San Francisco, California, but is currently based out of West Lake, Texas. The company employs more than 34,000 people and generates over $11 billion in annual revenue.

More About the Causes and Risks of Data Breaches

Often, data breaches are the result of a hacker gaining unauthorized access to a company’s computer systems with the intention of obtaining sensitive consumer information. While no one can know the reason why a hacker targeted Charles Schwab, it is common for hackers and other criminals to identify those companies believed to have weak data security systems or vulnerabilities in their networks.

Once a cybercriminal gains access to a computer network, they can then access and remove any data stored on the compromised servers. While in most cases a company experiencing a data breach can identify which files were accessible, there may be no way for the company to tell which files the hacker actually accessed or whether they removed any data.

While the fact that your information was compromised in a data breach does not necessarily mean it will be used for criminal purposes, being the victim of a data breach puts your sensitive data in the hands of an unauthorized person. As a result, you are at an increased risk of identity theft and other frauds, and criminal use of your information is a possibility that should not be ignored.

Given this reality, individuals who receive a Charles Schwab data breach notification should take the situation seriously and remain vigilant in checking for any signs of unauthorized activity. Businesses like Charles Schwab are responsible for protecting the consumer data in their possession. If evidence emerges that Charles Schwab failed to adequately protect your sensitive information, you may be eligible for financial compensation through a data breach lawsuit.

What Are Consumers’ Remedies in the Wake of the Charles Schwab Data Breach?

When customers decided to do business with Charles Schwab, they assumed that the company would take their privacy concerns seriously. And it goes without saying that consumers would think twice before giving a company access to their information if they knew it wasn’t going to be secure. Thus, data breaches such as this one raise questions about the adequacy of a company’s data security system.

When a business, government entity, non-profit organization, school, or any other organization accepts and stores consumer data, it also accepts a legal obligation to ensure this information remains private. The United States data breach laws allow consumers to pursue civil data breach claims against organizations that fail to protect their information.

Of course, given the recency of the Charles Schwab data breach, the investigation into the incident is still in its early stages. And, as of right now, there is not yet any evidence suggesting Charles Schwab is legally responsible for the breach. However, that could change as additional information about the breach and its causes is revealed.

If you have questions about your ability to bring a data breach class action lawsuit against Charles Schwab, reach out to a data breach attorney as soon as possible.

What Should You Do if You Receive a Charles Schwab Data Breach Notification?

If Charles Schwab sends you a data breach notification letter, you are among those whose information was compromised in the recent breach. While this isn’t a time to panic, the situation warrants your attention. Below are a few important steps you can take to protect yourself from identity theft and other fraudulent activity:

1. Identify What Information Was Compromised: The first thing to do after learning of a data breach is to carefully review the data breach letter sent. The letter will tell you what information of yours was accessible to the unauthorized party. Be sure to make a copy of the letter and keep it for your records. If you have trouble understanding the letter or what steps you can take to protect yourself, a data breach lawyer can help.

2. Limit Future Access to Your Accounts: Once you determine what information of yours was affected by the breach, the safest play is to assume that the hacker orchestrating the attack stole your data. While this may not be the case, it’s better to be safe than sorry. To prevent future access to your accounts, you should change all passwords and security questions for any online account. This includes online banking accounts, credit card accounts, online shopping accounts, and any other account containing your personal information. You should also consider changing your social media account passwords and setting up multi-factor authentication where it is available.

3. Protect Your Credit and Your Financial Accounts: After a data breach, companies often provide affected parties with free credit monitoring services. Signing up for the free credit monitoring offers some significant protections and doesn’t impact any of your rights to pursue a data breach lawsuit against the company if it turns out they were legally responsible for the breach. You should contact a credit bureau to request a copy of your credit report—even if you do not notice any signs of fraud or unauthorized activity. Adding a fraud alert to your account will provide you with additional protection.

4. Consider Implementing a Credit Freeze: A credit freeze prevents anyone from accessing your credit report. Credit freezes are free and stay in effect until you remove them. Once a credit freeze is in place, you can temporarily lift the freeze if you need to apply for any type of credit. While placing a credit freeze on your accounts may seem like overkill, given the risks involved, it’s justified. According to the Identity Theft Resource Center (“ITRC”), placing a credit freeze on your account is the “single most effective way to prevent a new credit/financial account from being opened.” However, just 3% of data breach victims place a freeze on their accounts.

5. Regularly Monitor Your Credit Report and Financial Accounts: Protecting yourself in the wake of a data breach requires an ongoing effort on your part. You should regularly check your credit report and all financial account statements, looking for any signs of unauthorized activity or fraud. You should also call your banks and credit card companies to report the fact that your information was compromised in a data breach.

Below is a copy of the initial data breach letter issued by Charles Schwab Corp.:

Dear [Consumer],

We are writing to let you know about a data event that may involve some of your personal information. Your trust is the foundation of our relationship, and we are committed to protecting the privacy of your information. As we outline below, we are taking steps to help you protect your data. We hope these actions can provide some peace of mind regarding your information’s ongoing security.

What Happened?

On December 16, 2021, Schwab discovered a potential issue regarding certain chat and email messages and immediately began an investigation. As a result of the investigation, we recently determined that between May 18, 2021, and December 16, 2021, certain chat and email messages sent through Schwab.com were inadvertently sent to external email systems.

What Information Was Involved?

The information potentially affected may include your name and one or more of the following: Social Security number or tax identification number, driver’s license or other state identification number, passport number, or username/password. To be clear, we have no evidence of any misuse of your information or unauthorized access to your Schwab account.

What We Are Doing.

Upon learning of this event, we immediately remediated the issue and worked to identify the information involved and who may be affected.

To help you maintain confidence in the ongoing privacy of your information, we have arranged for you to be able to enroll in credit monitoring and identity protection services from IdentityForce® for two years at no cost to you. To enroll, please follow the instructions provided at the end of this letter. Please note that the deadline to enroll is June 8, 2022.

Schwab will continue to apply its multiple layers of security protections, including the 24/7 monitoring of our systems and client accounts for any signs of unusual activity.

What You Can Do.

We recommend you review the enclosed “Other Important Information” document for further steps you can take to help protect your information. Additionally, Schwab offers the ability to set up security alerts and to enroll in advanced authentication that makes your Schwab sign-in more secure with two-step verification. To set up your alerts, enroll in two-step verification, or read about Schwab’s Security Guarantee, please visit schwab.com/schwabsafe.

Finally, we encourage you, as always, to remain vigilant to protect against potential fraud and/or identity theft by reviewing your financial account statements and monitoring your free credit reports. If you detect any suspicious or unrecognized activity on an account, you should promptly notify the financial institution or company with which the account is maintained.

For More Information.

We recognize the trust our clients place in us and understand the concern this event may cause you. The security of your information is a top priority for Schwab, and we have a dedicated team available to assist you. If you have any questions or concerns, please call us at 1-866-884-6417, Monday through Friday between 8:00 a.m. and 9:00 p.m. ET, or Saturday and Sunday between 10:00 a.m. and 7:30 p.m. ET. Clients of independent investment advisors, please call your advisor directly or call Schwab Alliance at 1-800-515-2157.