Financial Intelligence for Everyday Action

If you work with borrowers on credit readiness, you’ve seen the same pattern over and over again.

A client pays rent on time for years. They pay utilities on time. Their cash flow is stable. But their credit file does not reflect that consistency in a meaningful way.  ‍

When a credit file is thin, missing positive history can be the difference between “almost there” and “not yet.”

For credit education professionals and mortgage and lending teams, this is a structural problem, not a behavioral one. Clients do the right things, but credit systems do not always capture them.

That gap is exactly why alternative tradelines are moving from niche to mainstream.

In October 2022, the Federal Housing Finance Agency (FHFA) validated two newer credit score models: VantageScore 4.0 and FICO 10T. These models are designed to incorporate additional data sources, including rent payment history, as part of a broader view of borrower behavior.

This shift creates a practical opportunity: a high-impact, low-friction way to help clients show credit-visible progress sooner, while strengthening your own business through better retention and engagement.

This guide covers:

• What “alternative tradelines" really means for client credit strategy in 2026
• Why VantageScore 4.0 and FICO 10T make this more relevant now
• Where rent and utility reporting fits in a credit improvement plan
• How to position it with clients as speed-to-impact, not a gimmick
• How to operationalize this inside a full credit improvement plan
• How IDIQ turns this into a growth lever for your practice
  

What are Alternative Tradelines, Really?

Alternative tradelines are payment accounts that can show up on a person’s credit report but are not “traditional” credit products like credit cards, auto loans, student loans, or mortgages.

These reflect recurring bills people already pay, rather than borrowed money.

What counts as an alternative tradeline

1. Rental payments: On-time rent payments are reported to one or more credit bureaus.
2. Utility payments: Electricity, gas, water, and phone
3. Telecom services: Cell phone, landline, internet, and cable bills.
   

Why these tradelines are becoming more important now

For years, alternative tradelines lingered on the sidelines of credit conversations. Helpful in niche cases, but not central to score strategy.  

That is changing.

FHFA’s validation of VantageScore 4.0 and FICO Score 10T signals a clear direction for the industry: a fuller view of borrower behavior over time.

Credit evaluation is moving toward more complete representations of financial behavior and rent, and utility history is part of that conversation.  That makes rent and utility reporting a “do-now” lever.

It gives clients something tangible they can do immediately while longer-cycle strategies take effect. It also gives credit professionals something concrete to track early on: on-time payments turning into credit-visible history while the rest of the plan works in the background.

Rent reporting: a speed-to-impact lever for thin-file clients

The appeal of rent payment reporting is straightforward:

1. Your client already pays rent, which is likely their largest monthly expense
2. You aren’t asking them to open a new line of credit
3. You are converting existing behavior into a reported, positive payment history ‍

In a recent report from the Credit Builders Alliance (CBA), adding a positive rent tradeline has moved the needle significantly. Nearly 79% of participants experienced an increase in their credit score, with an average jump of 23 points.

Renters who started with no credit score became scorable. Subprime renters saw the biggest movement, averaging an increase of 32 points.

The takeaway? Rent reporting can add consistent on-time history to files that are light on positives, which is where early progress can be the hardest to generate.

Utility Reporting: Where it Can Help, and Setting Expectations with Your Clients

Utility bill payments don’t typically affect credit scores because most utility companies do not report on-time payments to credit bureaus.  

This creates an opportunity: if a client has consistent, on-time utility payments, utility payment reporting can add additional positive payment evidence.

There are two important points to communicate to your clients clearly:

1. Utility reporting may add positive history, but results vary by credit profile and scoring model.
2. Not all “utility and credit” approaches are the same. Some report as tradelines, some add data to a single bureau, and some do not affect credit reports at all.
   

How to Position Rent and Utility Reporting with Clients

Some clients assume rent and utilities already “count.” Others worry that reporting sounds like a shortcut. Your job is to frame both as credit visibility, clarify the differences between them, and set clean expectations up front.

1. Start with a simple definition
   
   • “This takes bills you already pay, like rent and utilities, and helps that on-time history show up as credit-visible payment information. This can strengthen your file over time without adding new debt.”
2. Clarify the difference between rent and utilities
   
   • “Rent reporting is usually the primary lever because rent is typically your largest monthly payment and can add consistent on-time history.”
   • “Utility reporting can be a secondary layer. Utilities do not typically show up as positive history by default, so reporting can add additional proof of stability.”
3. Clarify what rent and utility reporting is not
   
   • “This is not a promise of a specific score change, and it does not replace credit building fundamentals like on-time payments, utilization, and correcting errors.”
4. “It also does not affect every scoring model or every lending decision the same way, even when the payment history appears on your credit file.”
   Use language that feels responsible, not promotional
   
   • “We’re helping your credit file reflect what you’re already doing well.”
   • “This is credit visibility, not a shortcut.”
5. Avoid phrases that can backfire
   
   • “This will raise your score fast.”
   • “This works for everyone.”
   • “This changes what lenders see immediately.”
     

Credit wins for clients become retention wins for your business

One of the biggest challenges in credit education and lending workflows isn’t client understanding - it’s follow-through.  

Offering rent and utility reporting helps close that gap by giving clients tools they can use immediately.

This approach allows you to:

1. Turn education into action: Clients are more likely to stick with a plan when there is a clear “do this next” step that is easy to implement.
2. Create a consistent check-in cadence: Credit monitoring and reporting gives you structure for follow-ups, progress reviews, and early risk detection.
3. Differentiate your workflow: Most professionals can explain utilization and payment history. Fewer can operationalize momentum for their clients.
   

There is also a simple reason this tends to improve follow-through: people want help, and they want their responsible payments to count.

According to an IDIQ study, 95% of renters say they want access to resources that help them build and manage credit, and 80% want on-time rent payments factored into credit scoring.

When clients are already motivated, the most helpful thing you can do is make the next step clear, realistic, and easy to act on.

How rent and utility reporting fit into a full credit improvement plan

Rent and utility reporting work best as a supporting layer inside a structured plan, not a one-and-done trick.

A practical way to run it: confirm, activate, and reinforce.

Confirm: Before recommending rent and utility reporting, make sure the results are clean and consistent.  

1. Confirm rent and utility payments are paid on time, every time
2. Set expectations: this builds payment history over time, not overnight
3. Use compliance-friendly language: “credit-visible proof” instead of “guaranteed score increase”

Activate: Use reporting where it has the highest chance of impact.

1. Prioritize thin-file, low-history, or previously unscorable clients
2. Lead with rent reporting as the primary signal, with utility reporting where it makes sense
3. Introduce reporting during slower phases of a plan to maintain momentum

Reinforce: Keep it from becoming “set it and forget it.”

1. Position rent reporting as a way to get credit for the biggest bill they already pay
2. Layer in utilities as an extra positive signal when appropriate
3. Repeat the core message clients actually remember: “We’re helping your on-time bills show up where lenders can see them
   

What You Can Deliver Through IDIQ

Rent and utility reporting only helps your business if clients implement it correctly. IDIQ can help.

With IdentityIQ solutions, you can give your clients access to:

• Rent reporting to help clients build credit-visible payment history from their largest monthly bill ‍
• Utility reporting as an additional positive layer when appropriate
• 3-bureau credit reports and scores, plus 24/7 credit monitoring to track what posts and spot changes early ‍
• Identity theft protection, including $1 million in identity theft insurance
• Credit education tools to reinforce fundamentals and improve follow-through
• If you want rent and utility reporting to actually work as a retention lever, this is the missing piece: it needs to be easy to implement, easy for clients to understand, and easy for you to operationalize alongside monitoring and score tools
  

Final Notes

When clients are doing everything right, but their credit still looks thin, rent and utility reporting can help their file catch up to their behavior.  

It’s not magic. It’s visibility.

Unleash better credit outcomes for your clients and accelerate your business growth. Partner with IDIQ to unlock credit reports and monitoring, score tools, identity protection, and rent and utility reporting.

IDIQ is a financial wellness company. IDIQ does not provide legal advice. The information on the website is not legal advice and should not be used as such.

Tax season creates a perfect storm for fraud.

Your clients are gathering W2s, 1099s, Social Security numbers, employer details, and banking information. They’re logging into accounts they rarely touch. They’re moving quickly because they want their refund.

And scammers are waiting to capitalize. ‍

In 2024, the FTC received more than 1.1 million identity theft reports, and consumers reported more than $12.5 billion in fraud losses overall.

The risk is not just coming from complex cyberattacks. It often starts with seemingly innocent touchpoints: a text, a link, a “refund” message that looks official. In 2024 alone, consumers reported losing $470 million to scams that started with text messages.

When one bad click can cost a refund, rack up new accounts, and trigger months of cleanup, tax season becomes your moment to add protection, not just guidance.

In this article, you’ll discover:

• Why tax season is a high-risk time for identity theft and refund fraud
• A simple client action plan you can share
• The most common red flags clients should watch for
• What happens if your client is impacted
• How to use tax season to deepen relationships and drive revenue

Why Tax Season is High-Risk in 2026

Tax season creates the conditions criminals look for: a mass exchange of sensitive personal information, moving quickly across email, portals, mail, and third-party preparers.  

Clients are uploading documents, responding to refund status updates, and trying to stay on deadline. Scammers try to insert themselves into that workflow.

Two patterns matter most right now:

1. Refund-themed messages are a common entry point: The FTC warned in January 2026 that texts or emails claiming a refund is “processed” or “approved” often push people to click a link and enter SSNs and banking details.
2. Digital impersonation spikes during filing season: The IRS warns about phishing and smishing and emphasizes that it does not make initial contact through email or social media channels.

The key takeaway is simple.

During the tax season, the risk feels real. Clients are paying attention - that makes this a natural moment to talk about protection.

A Simple Tax-Season Safety Plan for Your Clients

It helps to give your clients a clear baseline for what “safe behavior” looks like during tax season.

Encourage clients to:

• Use official refund tracking tools only: Refund status should be checked through IRS-approved resources like “Where’s My Refund?” or the IRS2go app. ‍
• Be cautious with refund messages: Unsolicited texts or emails asking for identity or banking information should be treated as suspicious until verified through official channels. ‍
• Set up an IRS Identity Protection PIN: An IP PIN helps prevent someone else from filing a tax return using a client’s Social Security number.  ‍
• Choose tax preparers carefully: The IRS warns against preparers who refuse to sign returns, promise unusually large refunds, or base fees on refund size. ‍
• Secure rarely used accounts: Updating passwords and enabling multi-factor authentication is especially important for tax, payroll, and financial accounts used only once a year.  ‍
• Add credit file protection when appropriate: Fraud alerts and credit monitoring can help catch identity misuse early if tax information is compromised.

With these basics in place, clients are better prepared to spot problems before damage spreads.

Related: IDIQ Partners IDIQ Partners with Three National Tax Associations

The Most Common Tax Season Scams Clients Fall For

Tax scams aren’t always obvious. Many look-like routine financial messages or even helpful advice. ‍

Educating your clients on the most common patterns can help them pause and verify before handing over the information needed to file a fraudulent return or steal a refund.

“Refund approved” texts and emails‍

These messages claim a refund is waiting and pushing the receiver to click a link to verify their identity or banking information. The FTC specifically warned about this pattern in 2026. ‍

IRS impersonation texts or calls‍

Scammers pose as the IRS, using urgency, fear, and threats to push action. They may promise a “too good to be true” refund, threaten that clients must pay now or face arrest or deportation, or provide fraudulent website links that take users to harmful websites instead of IRS.gov.

‍Social media “refund hacks” and bad advice‍

Social media can be one of the most overlooked tax season risk areas, because it doesn’t look like a scam at first. It can look like financial advice, posted confidently, shared by someone who seems credible.

But bad tax advice on social media can mislead taxpayers about their credit or refund ability. In some cases, these posts are doing more than spreading misinformation; they may route taxpayers towards links that connect them directly with cybercriminals.  ‍

Tax Refund Advance Scams

‍Some scams exploit confusion around refund advances. Criminals steal a taxpayer’s personal information, impersonate them, and file a fraudulent return through a tax preparation service. That service then approves a refund advance based on the fake return, and the scammer routes the advance to their own accounts.

By the time anyone realizes what happened, the scammer is long gone - and taxpayers have lost refund money AND must repay the loan taken out in their name.

If your client gets hit, the worst outcome is not just the stolen refund. It’s the follow-on fraud that spreads into credit, banking, and future filings.

Related: Protecting Your Clients in the Age of Evolving Fraud

What To Do If Your Client Is Impacted by Tax Scams

This is a high-stress moment for clients. Your job is not to diagnose a tax issue. Your role is to create a clear sequence of next steps, reduce panic, and help protect their credit file from follow-on fraud.

Recommended next steps include:

1. Have your client create an official identity theft report: Recommend they report the incident at IdentityTheft.gov or call the FTC. This creates documentation and a recovery plan they can follow.  
2. Have your client contact the IRS identity theft unit: Recommend they contact the IRS for identity theft assistance so the IRS can help address tax-account risk and identity verification steps. The IRS specifically directs identity theft victims to specialized assistance at 800-908-4490.  
3. If needed, file IRS Form 14039: If your client cannot e-file because a return was already filed under their SSN, IRS guidance is to file a paper return and include Form 14039.
4. Protect against follow-on fraud: Tax fraud often leads to broader identity theft issues. Credit monitoring and fraud alerts help detect new activity.
5. Close the loop on financial accounts: Recommend your client contact any banks and financial institutions where their accounts may be at risk, especially if the tax refund scam involved their banking details or logins.  

How You Can Use Tax Season To Deepen Relationships And Drive Revenue

Tax season provides credit professionals a natural reason to check in. When protection is the focus, your outreach will feel helpful, not promotional.  

Check In Proactively

Here’s a sample client message you can share:

“Subject: A quick tax-season safety reminder

Tax season is a common time for refunds and identity scams. Before you file, here are a few reminders to help protect your information:

• Use official IRS tools to check your refund
• Ignore messages asking you to click links or share personal details
• Consider setting up an IRS Identity Protection PIN
• Let me know if anything looks unusual
  

If you would like, we can also do a short tax-season protection review check to walk through these steps together.”

Offer a Tax Season Protection Review

A quick check-in can make all the difference. Plan time to meet with clients, providing a structured time to help them identify risks and recommend the right next steps.

Discussion items:

• Create an IP PIN plan, explaining why it matters and how to get it
• Review the top refund scam patterns they should avoid
• Scan for credit red flags: new accounts, unexpected inquiries, or address changes
• Share official refund tracking resources

Offer add-ons that inspire confidence

Credit professionals can keep support simple while still giving clients meaningful protection. One of the easiest ways to do that is to offer optional add-ons powered by IDIQ, so clients can choose the level of coverage that fits their situation.  

By partnering with IDIQ, you can offer clients:  ‍‍

• Credit monitoring: Help clients stay aware of changes that may signal follow-on fraud, including new accounts, inquiries, or suspicious activity. ‍
• Identity theft protection: Give clients added coverage during a season when personal data is moving fast and scams are most active. ‍
• Family protection monitoring: Extend protection beyond the primary filer, which can matter when households share devices, documents, and financial accounts. ‍
• Identity restoration support: Provide guided help if identity theft occurs, so clients aren’t left trying to navigate recovery steps alone.

Because tax season creates urgency and real vulnerability, clients are often more receptive to protection offerings during this window, especially when they are positioned as a practical layer of support.

Final Thoughts

Tax season is a high-risk season. Your clients are moving sensitive data quickly, and scammers are waiting to take advantage.  

If you want to build loyalty in 2026, treat this time as a client protection program: a short review, a simple checklist, and a clear offer for monitoring and support.

For partners who want to turn this into a repeatable client program, IDIQ makes it easier to deliver protection at scale.

With IdentityIQ tools, partners can pair education with action, offering identity theft protection, fraud alerts, three-bureau credit monitoring, plus credit reports and score tools that help clients stay informed and protected throughout tax season and beyond.

IDIQ is a financial wellness company. IDIQ does not provide legal advice. The information on the website is not legal advice and should not be used as such.

When running a business, unexpected challenges come with the territory. But when those challenges involve company or client data, the stakes are far higher.

If you’ve just received an alert about something suspicious or your team is facing a flood of emails from customers asking whether their data is safe, panic can quickly set in. And before you can act, you need to know exactly what you’re dealing with. Is it a data breach or a data leak?

A data breach happens when someone intentionally breaks into your systems, while a data leak happens when information is accidentally exposed.

Both can expose sensitive information, and for small and mid-size businesses, knowing which you’re facing can help determine how you respond, how fast you act, and how you recover.

In this article, we’ll break down the differences between a data leak and a data breach, explain how each should be handled, and outline steps you can take to help protect your organization when the unexpected happens.

What is a Data Breach?

A data breach occurs when an unauthorized person or group gains access to your organization’s data or systems intentionally.

These cybercriminals are often after customer information, employee records, financial data, or credentials, and when they gain access, the damage can be catastrophic.

Common causes of data breaches include:

• Phishing emails that trick employees into sharing credentials
• Outdated software or security tools  
• Malware or ransomware attacks
• Data posted in dark web forums
• Spyware
• Third-party breaches

Breaches can be costly and have lasting effects on your business reputation. Data breaches often require organizations to follow compliance requirements, send out legal notifications, and even pay costly fines — not to mention the potential loss of customer trust.

Related: 10 Tips for Data Breach Prevention

Data breach statistics show how devastating a data breach can be. In 2024, the average cost of a breach in the U.S. rose to $10.22 million, mainly as a result of regulatory fines and slower response times.

Small businesses aren’t immune to data breaches. Many attackers view small to midsize companies as ideal data breach targets, as they’re easier to infiltrate and sometimes can be leveraged as a gateway to larger entities.

The Hidden Risk of Third-Party Breaches

Data breaches can often stem from outside sources. Small businesses rely on software tools, cloud platforms, and contractors. These connections can be the pathway attackers use to reach sensitive data. Recent studies show that about one-third of breaches are linked to third-party providers. Understanding how these threats work helps companies build stronger defenses.

For example:

• Third-party breaches are widespread. SecurityScorecard reported that 35.5 % of breaches in 2024 involved vendors
• Criminals often target smaller contractors and service providers because their security measures are weaker
• One of the most well-known incidents involved Target in 2013. Hackers gained access through credentials stolen from an HVAC vendor and exposed 40 million payment cards

If your company provides a service, strong internal security protects your clients. A breach in your system can spread to other businesses and cause serious financial and reputational harm. Here are a few business security practices you can implement:

• Keep an accurate list of vendors and categorize them by risk (how much sensitive data they handle). Only 46% of organizations conduct risk assessments on vendors that handle sensitive data
• Require vendors to complete security questionnaires and follow standards such as SOC 2 or ISO 27001
• Use contracts to set expectations for security controls, multi-factor authentication, encryption, and the right to audit
• Monitor integrations and API connections for unusual activity to catch breaches early

What is a Data Leak?

A data leak is typically accidental, not malicious. It occurs when information is unintentionally exposed or made accessible to unauthorized parties, often because of human error or system vulnerabilities.

For example, an employee may send an email containing confidential company data to the wrong recipient or store unencrypted data in an unsecured cloud folder.

While unintentional, the results can be just as devastating as a breach.

Common causes of a data leak include:

• Accidental sharing of internal files or spreadsheets
• Unsecured cloud storage
• Unencrypted data
• Loss or theft of devices containing sensitive information
• Misconfigured software settings

Comparing Data Breaches and Data Leaks: Key Differences

While the terms “data breach” and “data leak” are often used interchangeably, they describe quite different scenarios.

The table below provides a clear breakdown of how leaks and breaches differ, and what each means for your business.

While both incidents put sensitive information at risk, the intent and response differ significantly. Knowing which happened allows your data breach response team to take immediate steps to minimize impact and prevent further damage.

Data Breach vs Data Leak: Why It Matters for Your Business

When you are in the midst of a data crisis, the cause is rarely easy to spot — at least at first.

Your only signs might be strange login attempts or messages from customers that their data has been compromised. And at that moment, it can be nearly impossible to determine whether it was a targeted attack or accidental exposure.

That uncertainty can be paralyzing for business owners. While large corporations often have dedicated incident response teams, most small businesses are juggling everything else — operations, customer service, payroll — and rarely have a cybersecurity department to lean on.

And when it comes to compromised data, timing is everything. Every hour spent guessing what happened and how to respond is time that your exposed information could be spreading.

So, whether it was a breach or a leak, acting quickly is essential.‍

The Cost of Waiting Too Long to Respond to a Data Breach or Leak

Data breaches are often discovered long after they have occurred. According to recent research, it takes an average of 277 days to identify and contain a data breach, largely because many go undetected for extended periods.

Unfortunately, when data exposure occurs, many businesses are left unprepared. Nearly 6 in 10 small business owners assume they are too small to be targeted. This costly misconception can leave them exposed to costly data exposures.

The reality is harsh: 43% of all data breaches involve small businesses, often because limited resources and lax protocols make them easy targets. And with the average ransomware recovery cost hitting $84,000, many small businesses never recover.

Responding to a Data Leak vs. a Data Breach

Not every data leak incident is the same, so response plans should differ accordingly.

How to Respond to a Data Breach

A data breach is an active threat. Act fast, be transparent, and focus on recovery to mitigate damage.

1. Containment: Disconnect any affected systems and change credentials immediately.
2. Enlist a Response Team: Find data breach response solutions that can help you address vulnerabilities and restore systems.
3. Follow Regulations: Ensure all notification and reporting requirements are met; noncompliance can lead to significant fines.
4. Be Transparent: Be clear with your customers and employees about what happened and offer protections such as identity theft protection services.
5. Review: Strengthen your response plan and implement ongoing monitoring so you can help prevent future breaches and respond faster if they occur.

Responding to a Data Leak

If you’re responding to a data leak, you are often responding to an identified risk of data exposure rather than confirmed data theft.

1. Containment: First, secure your exposed data. Restrict access and remove any public links.
2. Investigation: Determine the cause of the issue; whether it is human error or a system misconfiguration, document what happened.
3. Process Improvement: Reconfigure settings, add safeguards, and train employees in data breach prevention to avoid future exposure.
4. Notify Customers: If sensitive information was leaked, notify those affected. The more transparent you can be, the better.
5. Monitor Leaked Data: Keep watch for any signs of further misuse and set up alerts for any exposure on the dark web.

Think of a data leak as a lesson — one that exposes gaps in process and training that can (hopefully) be addressed before something worse happens.

Data Breach Vs Data Leak FAQs

If you’re experiencing a data exposure, you probably have a lot of questions. Here are answers to some of the most common questions our clients have when experiencing a data breach or data leak:

1. Can a data leak lead to identity theft or financial fraud?

Yes. Although a data leak is accidental, the exposed information can still be accessed by criminals who may use it for identity theft, account fraud, or phishing scams. Even a simple piece of information, like an email address, can be utilized to create targeted attacks. This is why taking prompt action and monitoring is crucial.

2. How long does it take for a business to recover from a data incident?

Recovery time depends on the severity of the incident. A minor leak may be resolved in a few hours, while a significant breach can take weeks or even months. The recovery process includes securing systems, investigating the cause, notifying affected individuals, restoring data, and monitoring ongoing risks. Businesses that have a response plan in place typically recover much faster.

3. Are small businesses required to report data breaches or data leaks?

In most cases, yes. Many states and industries enforce data privacy laws that require businesses to notify affected individuals and, in some cases, regulators when sensitive information is exposed. Requirements can vary by state, type of data, and industry, so it is important to understand the regulations that apply to your business.

4. Does cyber insurance cover data leaks and data breaches?

Many cyber insurance policies provide coverage for both leaks and breaches, but coverage can vary by provider. Policies often include legal guidance, forensic investigation, customer notification support, data restoration, and sometimes identity theft protection for affected individuals. It is essential to review your policy details to understand what is included.

How IDIQ Helps Small Businesses Respond to Data Exposure

Whether your company faces a data breach or data leak, one thing is true: time is your most valuable asset. The faster you respond to a data exposure, the better your chances of mitigating damage, meeting legal requirements, and restoring your customers’ trust.

IDIQ offers comprehensive data breach response plans tailored to meet the needs of small and midsize businesses, including:

• Rapid response for accidental data leaks and confirmed data breaches
• Dedicated, U.S.-based support to help coordinate recovery
• Identity theft protection services for affected employees and customers
• Tailored response plans designed for your business needs
• Customer notification support to help you contact affected individuals and comply with state regulations

From response to recovery, IDIQ helps protect your organization and reputation when it matters most.

Final Thoughts

Whether your business uncovers a data breach or data leak, both require immediate attention and action.

If you suspect your data has been compromised accidentally or intentionally, contact the IDIQ data breach team today to begin your breach recovery and protect your business before it’s too late.

Running a small business is no small task. Between managing employees, covering expenses, and keeping customers happy, you’re already wearing a variety of hats.

And now you have to add data breach management to the list? Unfortunately, in today’s digital world, cybersecurity threats are a reality small business owners can’t ignore.

Cybercriminals have shifted their focus to smaller, more vulnerable organizations. In fact, 82% of ransomware attacks now target smaller businesses, which often lack the resources, employee training, and safeguards that larger corporations have. That makes them easier targets.

When a data breach occurs, the consequences can be devastating. Up to 60% of small businesses that are targeted in a cyberattack go out of business within six months.

It’s a terrifying statistic, but here’s what matters: in the event of a data breach, there are tried and true steps you can take to mitigate your losses, meet your obligations, and start rebuilding trust with your customers.

In this article, we’ll walk you through what to do immediately following a breach, so that you can get back to business with confidence.

Why Small Businesses Are Prime Targets for Cybersecurity Attacks

In 2023 alone, 350 million people were affected by data breaches. And while cybersecurity attacks can affect companies of any size, small businesses are disproportionately affected.

According to the Verizon Data Breach Investigations Report, small businesses account for 43% of all data breaches.

Unfortunately, many of those small businesses are underprepared. A recent study revealed that nearly one quarter of small businesses have no device security, and one in three rely on free or basic solutions that may not offer strong security coverage.

On top of that, many small businesses also admit that their teams are inadequately trained to spot and stop cyberattacks before they spread.

To make matters worse, hacker tactics continue to evolve. From malware to phishing emails, cybersecurity for small businesses continues to get more complex. The chart below shows the most common cyber risks in 2025, including data breaches:

Clearly, there’s plenty of risk to contend with. Without rigid data breach prevention tactics in place, small businesses stand to lose a great deal, and the repercussions can be devastating.

The cost of a small business data breach can vary, but recent research shows cybersecurity incidents can cost small businesses an average of $2.98 million.

Small business data breach statistics are sobering, but there is hope. If your business experiences a data breach, acting quickly is the only way to prevent further damage and protect against long-term fallout.

The First 24 Hours Following a Data Breach: Containment Matters Most

When a data breach occurs, time is your most valuable asset. Waiting even a few hours to begin managing the situation can significantly increase the damage, and in many cases, the clock has already been ticking by the time you discover the problem.‍

According to IBM research, it takes an average of 277 days to identify and contain a data breach, largely because many go undetected for long periods. Larger organizations typically discover breaches faster than small organizations because they have strong, established cybersecurity practices.

Unfortunately, many small businesses find themselves unprepared to respond quickly, with half of small businesses reporting it took 24 hours or longer to recover their website after a cyberattack.

However, according to an IBM Data Breach Report, businesses that are able to contain a breach within 30 days can save over $1 million, so the sooner you can respond to a data breach, the better.

The Federal Trade Commission (FTC) recommends critical first steps when a small business data breach occurs.

1. Secure Your Business Quickly

As soon as you’re aware of a breach, focus on containment:

• Hire a data breach response team like IDIQ quickly
• Lock down any affected systems or physical areas
• Remove any exposed information from your website, then request removal from third-party websites or search engines
• Update passwords and any other access credentials

Taking these actions in the first 24 hours limits additional exposure and sets the foundation for recovery.

2. Consider and Address Vulnerabilities

Containing a small business data breach is only the first step, but understanding how it happened is just as critical.

Small businesses often rely on external providers for payroll services, IT support, and other key tasks that they can’t manage internally, meaning vendors could be a significant vulnerability. In fact, a recent study found that 35.5% of breaches in 2024 involved third-party vendors with access to sensitive data.

Review the information your vendors have access to and adjust or revoke privileges as necessary. Be sure you trust their security processes (and verify they make any necessary changes if they were responsible for the breach) before continuing your partnership.

Your Legal Obligations & Notifications

Every state has its own rules regarding how and when a business must notify customers after a data breach. Most require businesses to notify affected individuals within 30 to 60 days. Failing to do so can result in steep fines and lawsuits, and the loss of your customers’ trust.

IT Governance USA offers state-by-state data breach laws so you can understand exactly what’s required in your area.

IDIQ’s data breach response services help take care of breach notification requirements, helping you stay compliant while protecting your business and customers.

Use Identity Theft Protection

While not a legal requirement, adding identity theft protection services can help you better support your customers.

IDIQ’s identity theft protection services provide real-time monitoring, dark web scanning, and fraud restoration services for comprehensive support.

By giving your customers a proactive solution, you can reduce both the cost of the breach, improve customer sentiment, and make the experience less overwhelming.

Communicating a Data Breach to Your Customers

When a data breach occurs, your customers can face some of the worst fallout. Up to 87% of small businesses hold sensitive customer data, ranging from addresses to credit card details, that could be exposed in a breach.

The trickle-down effect of a data breach can impact customers in more ways than one. In 2023, 60% of companies that suffered a data breach were forced to raise their prices to recoup their losses. This means consumers don’t just deal with having their information exposed, but can end up paying the price even long after the breach is over.

When you notify your customers, be sure to let them know:

• What happened and when it occurred
• The data that was (or may have been) exposed
• The steps you’ve already taken to contain the breach
• What your customers can do to protect themselves, such as credit monitoring or identity theft protection
• How you’ll keep them updated moving forward

Be honest and transparent. Share real details, don’t downplay the situation, and let your customers know how your data breach response plan provides them with ongoing protection.

This type of clear, transparent communication shows accountability and can prevent long-term damage to customer trust.

Preventing Your Next Data Breach

There are key steps you can take to prevent future data breaches. The FTC offers 10 simple steps for small businesses to consider:

1. Train employees: Up to 47% of businesses with less than 50 employees report having no cybersecurity budget, meaning staff mistakes can quickly turn into unintentional but costly incidents. Create a clear set of rules for passwords and handling sensitive information.
2. Protect devices from cyberattacks: Ensure software, browsers, and operating systems are up to date. Run antivirus scans to spot problems quickly.
3. Use firewall security: Enable firewalls on all systems to block unauthorized access.
4. Consider mobile devices: If your team needs to use mobile devices for work, require password protection, encryption, and security applications. Create a process to report lost or stolen equipment.
5. Back up your data: Implement automatic, regular backups of essential files and store them offsite or in a protected cloud network.
6. Control access to information: Restrict access to business computers or data, set up individual user accounts with passwords, and limit admin privileges to only essential staff.
7. Secure your Wi-Fi: Hide and password-protect Wi-Fi networks to prevent outside access.
8. Protect company credit cards: Use anti-fraud tools and isolate your payment systems from general internet use.
9. Limit employee access to data: Give employees access only to the tools and/or data essential for their role.
10. Strengthen passwords and authentication: Weak or stolen passwords account for 80% of hacking incidents. Require your team to regularly update their passwords and use multi-factor authentication (MFA) for an added layer of security.

How IDIQ Can Help You Navigate a Data Breach

A data breach can be devastating for a small business, but how quickly you respond helps determine how your organization recovers. That’s why IDIQ provides comprehensive data breach response plans designed to move quickly.

With advanced monitoring and around-the-clock support for your team members, employees, or customers who have had information exposed in a data breach, you can rest assured you have the help you need to stop the spread of a data breach when you need it.

With IDIQ, you gain access to:

• ‍24-Hour guaranteed response time, so you get the help you need as fast as possible‍
• Customized recovery plans built for your business‍
• Dedicated support so you get the best care tailored to your unique needs‍
• Customer notification support to help you manage notifying affected people ‍
• Identity theft protection services to help protect affected customers and employees

With nearly two decades of cybersecurity experience, IDIQ can help you navigate the stress, legal obligations, and end-to-end tasks necessary to protect your brand and your customers.

Reach out to IDIQ’s data breach response team today for the support you need to take back control.