Reducing the Risk of Mass Data Breaches with Selective Disclosure

How Over-Collection of User Data Leads to Breaches

Data breaches continue to be one of the most significant cybersecurity threats facing organisations today. With cybercriminals targeting centralised identity databases and exploiting vulnerabilities in traditional authentication systems, businesses must reconsider how they collect, store, and manage user data. One of the leading causes of mass data breaches is over-collection of personal information, where businesses require users to submit more details than necessary for verification.

This approach creates a high-risk environment, where vast amounts of personal data are stored in centralised repositories, making them attractive targets for hackers. When these databases are breached, the fallout can be catastrophic—compromised personal information leads to identity theft, financial fraud, and regulatory penalties. In an era where digital privacy compliance is becoming more stringent, organisations must adopt solutions that minimise data exposure while maintaining secure and verifiable authentication.

Selective disclosure is a privacy-first approach that allows users to verify their identity without revealing excessive personal details. Instead of sharing full identity documents, individuals can cryptographically prove specific attributes, ensuring that only the necessary information is disclosed. This method significantly reduces the risks associated with centralised data storage, aligning with data minimisation principles outlined in GDPR, PDPA, and ISO 27001 standards.

By implementing selective disclosure, businesses can enhance identity security, protect user privacy, and ensure regulatory compliance, all while reducing the likelihood of large-scale data breaches.


The Problem: Centralised Identity Verification Exposes Unnecessary Personal Information

Traditional identity verification models require users to submit full personal documents for authentication. Whether for KYC (Know Your Customer) compliance, financial transactions, or online services, users are often forced to provide more data than necessary. This method creates several security vulnerabilities that increase the risk of mass data breaches.

One of the biggest flaws of centralised identity verification is that it aggregates sensitive information in large, centralised databases. These systems store full copies of passports, driver’s licences, social security numbers, and biometric data, making them an irresistible target for cybercriminals. A single breach can result in millions of personal records being exposed, leading to identity theft, fraudulent transactions, and reputational damage for businesses.

Another critical issue is data overexposure. When users are asked to provide their full identity document for a simple verification process—such as proving their age or residency—they expose all their personal details, including sensitive information that is irrelevant to the verification process. This unnecessary data exposure increases the likelihood of identity fraud and violates privacy regulations that enforce data minimisation.

Additionally, storing excessive personal data creates ongoing compliance risks. Regulations like GDPR, PDPA, and CCPA mandate that organisations must only collect and retain the minimum amount of personal information necessary for a specific purpose. Businesses that fail to implement data minimisation practices face legal penalties, operational inefficiencies, and loss of customer trust.

With cyber threats becoming more sophisticated and privacy laws becoming stricter, the traditional centralised identity model is no longer viable. Organisations must shift towards privacy-first authentication methods that reduce unnecessary data exposure while maintaining robust security.


The Solution: How Selective Disclosure Enables Privacy-First Authentication

Selective disclosure is a game-changing approach to identity verification that allows individuals to share only the information required for a specific transaction. Instead of providing full identity documents, users can selectively reveal specific attributes—such as age, nationality, or credit eligibility—without exposing additional personal details.

This method is made possible through cryptographic techniques, such as zero-knowledge proofs (ZKPs) and verifiable credentials (VCs). When a user needs to prove a certain identity attribute, they can present a digitally signed claim from a trusted issuer, which is verified without revealing the underlying document or personal details.

By implementing selective disclosure, businesses can achieve stronger identity security, reduce data retention risks, and enhance user privacy. This approach aligns with privacy-by-design principles, ensuring that personal information is not over-collected, over-stored, or misused.

From a security perspective, selective disclosure eliminates the need for businesses to store full identity records, significantly reducing their risk profile in the event of a cyberattack. Since fewer personal details are retained, the potential impact of a data breach is drastically minimised. This makes identity fraud much harder to execute, as attackers no longer have access to large pools of personal information.

For users, selective disclosure provides greater control over their personal data, allowing them to determine what information they share and with whom. This improves trust and transparency in digital interactions, fostering stronger relationships between businesses and their customers.

In highly regulated industries—such as banking, healthcare, and government services—selective disclosure enables organisations to meet compliance requirements while simplifying identity verification workflows. Businesses can perform secure and seamless KYC checks, medical record verifications, and public sector identity verification without collecting unnecessary user data.


Compliance Benefits: Aligning with GDPR, PDPA, and ISO 27001 Standards

Selective disclosure plays a crucial role in helping businesses comply with global privacy regulations by ensuring that they collect only the necessary user information.

1. GDPR Compliance & Data Minimisation

Under Article 5(1)(c) of the GDPR, organisations are required to minimise the collection of personal data, limiting it to what is strictly necessary for a specific purpose. Traditional identity verification processes that over-collect and retain full identity documents violate this principle, exposing businesses to non-compliance risks and regulatory penalties.

Selective disclosure ensures GDPR compliance by allowing users to share only required identity attributes. This reduces data storage liabilities, making it easier for businesses to manage user information in a privacy-compliant manner.

2. PDPA & User Consent for Identity Verification

In jurisdictions governed by Personal Data Protection Acts (PDPA), businesses are required to obtain user consent before collecting personal data. Additionally, data controllers must implement measures that protect user privacy and limit unnecessary exposure.

By integrating selective disclosure, organisations can improve user control over personal information, ensuring that individuals provide explicit consent before sharing any identity attributes. This approach aligns with privacy-by-design principles, reducing compliance risks while maintaining secure identity verification practices.

3. ISO 27001 & Identity Security Standards

ISO 27001 sets global standards for information security management, requiring businesses to minimise data exposure and implement strong access controls. Selective disclosure aligns with these security best practices by reducing attack surfaces and eliminating unnecessary data storage.

By adopting selective disclosure, organisations strengthen their cybersecurity posture, simplify compliance workflows, and protect sensitive user data from exposure.


Adopt Selective Disclosure with Block Identity

The risks associated with mass data breaches, identity fraud, and regulatory non-compliance highlight the urgent need for privacy-first identity solutions. Traditional authentication models that over-collect user data and rely on centralised repositories are no longer sustainable in today’s cyber threat landscape.

Selective disclosure provides a modern, secure, and privacy-preserving approach to identity verification, ensuring that users can authenticate without overexposing their personal information. By adopting selective disclosure, businesses can:

  • Reduce the risk of mass data breaches by minimising data collection.
  • Ensure compliance with GDPR, PDPA, and ISO 27001 standards.
  • Enhance trust by giving users control over their personal information.
  • Implement a scalable, privacy-first authentication framework.

Adopt Selective Disclosure—Talk to our team about Block Identity today.

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