Arjun Bhatnagar is cofounder and CEO of Cloaked, a consumer-first privacy and security company putting people in control of their data.
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Our society has become increasingly and dangerously comfortable sharing personal information over the last three decades. We’ve operated on a handshake agreement: We give businesses our personal information, and they give us convenience. This agreement has been based on the assumption that businesses will also do everything they can to protect our personal information. Unfortunately, this casual approach to data sharing and trust in corporate America has failed us as consumers and has become a liability for businesses.
The risk of data collection has never been higher. Breaches, large and small, are becoming commonplace, costing global businesses an average of $4.4 million per breach, with cybercrimes resulting in nearly $21 billion in losses last year alone. We’ve learned the hard way that very few businesses have the security infrastructure in place to manage the volume of necessary (and unnecessary) data they collect, or the ability to keep pace with evolving threats and technology.
AI has made scamming more ubiquitous and sophisticated. Unchecked data-broker sharing means a single piece of personal information can unlock every sensitive detail about someone, making it that much easier to breach organizational security protocols through the people, customers and partners attached to it.
Even with access to privacy-enhancing tools today, such as persistent pseudo-anonymous identifiers or personas, which are proven to protect personal privacy, provide an avenue for communication and minimize the risk of breaches, we’re seeing businesses continue to insist on customers using the same vulnerable phone number or email address they’ve used for the last 20 years. Why do this when this old-school approach to knowing customers puts them and a company’s bottom line at risk?
What if corporate America shifted from viewing these tools as a business barrier to seeing them instead as the foundation for better business practices? This just might allow the cultural shift we need to develop a mutually beneficial relationship between customers, businesses and data. One where information sharing and protections minimize ongoing threats from bad actors, while enabling communication, convenience and access.
A key value to businesses is decreased liability. By allowing consumers to use persistent pseudo-anonymous identifiers or virtual identities, companies can verify and interact with customers while successfully shrinking their attack surface, reducing the vulnerability of stored data. The data becomes less valuable to bad actors because a persistent identifier is virtually useless for malicious purposes. Businesses might not be able to predict when a breach may occur, but they may breathe easy knowing their bottom line and reputation will be preserved when it does.
Consumers are tired of sharing personal information, especially in the age of AI. People have drawn the link between providing personal information to businesses and the growing number of spam calls and texts they receive daily, and are now seeking out brands that respect boundaries and support privacy efforts. Privacy-enhancing technology tools can create a trusted partnership with customers, one that will drive higher conversion rates and long-term brand loyalty.
Most businesses collect more data than they need for efficient operations and customer service. By supporting customer use of privacy-enhancing tools, businesses can shift from a defensive to an offensive data posture. Compliance is streamlined, storage costs are reduced, and the chance of regulatory fines is minimized. In addition, the decision forces teams to think more strategically about how they design data collection, often leading to cleaner data architecture and enhanced decisions down the line.
Right now, a pivotal federal policy is at play: the MY DATA Act of 2025 (HR 6043). Introduced by Representative Lori Trahan, this legislation establishes parameters for data collection that we’ve lacked for decades. At its core, it gives consumers the power to choose how to protect their personal data through the use of persistent identifiers or “cloaked” data, thereby granting a legal right to digital privacy. It also helps businesses minimize the risk of breaches or other malicious behavior by reducing their data footprint and attack vectors. The MY DATA Act provides a clear standard for using privacy-enhancing technology, eliminating the headache of navigating a patchwork of state laws and regulations.
The record-breaking risks and jaw-dropping financial losses attached to data reinforce the critical need for concrete business and government policies that formalize data-sharing best practices. Until this happens, businesses remain tethered to high-stakes vulnerabilities, and consumers are exposed.
The handshake agreement of the past is broken, and quite frankly, bad for business. Certain data is no longer an asset but a liability, and it is time to create a digital future that allows customers to remain anonymous when communicating in order to build better, more secure businesses.
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