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PayPal Confirms Major Data Breach — How to Protect Your Account
If you use PayPal — particularly if you've ever applied for a PayPal Working Capital business loan — stop what you're doing and read this carefully.PayPal has officially confirmed a serious data breach. Not a rumor. Not a third-party leak. A confirmed, company-admitted breach that left your Social Security number, date of birth, email address, phone number, and home or business address exposed to unauthorized strangers for nearly six full months.
And for some users? It went further than exposure. Money was actually stolen.
What Happened — The Full Story Behind the PayPal Breach
This didn't happen because a hacker deployed some Hollywood-style cyberattack. The breach resulted not from an external intrusion campaign but from an internal software defect — a code change within the PayPal Working Capital loan application interface that inadvertently permitted unauthorized third parties to access customer personally identifiable information (PII).
In plain language: someone inside PayPal's engineering team pushed a software update. That update contained an error. And that error quietly opened a door — a door that strangers walked through for 165 days before anyone noticed.
The personally identifiable information of a small number of customers was exposed to unauthorized individuals during the timeframe of July 1, 2025, to December 13, 2025. (Bleeping Computer) PayPal detected the problem on December 12, 2025, and fixed it the following day by rolling back the faulty code. But by then, the damage was done.
PayPal formally notified affected customers via written disclosure dated February 10, 2026 more than two months after discovering the incident. That gap between discovery and notification has raised eyebrows and serious questions about how PayPal handles transparency with the people who trust it with their most sensitive financial data.
What Data Was Stolen? Here's the Full List
This is the part that should genuinely alarm you. This wasn't just an email address leak. Exposed information included names, email addresses, phone numbers, business addresses, dates of birth, and Social Security numbers.
Think about what that combination means for you personally. Your full name, paired with your Social Security number and date of birth, is essentially everything a fraudster needs to open a credit card in your name, file a fake tax return, apply for a loan, or sell your identity on the dark web to the highest bidder. These aren't hypothetical risks — they are documented, common consequences of this exact type of data exposure.
The compromised information includes a high-value combination of business contact and sensitive identity data. Affected customers may have had their full name, email address, phone number, and business address exposed alongside their Social Security number and date of birth — details sufficient to enable identity theft, account takeover, and targeted social engineering attacks.
If you're a small business owner who has ever applied for a PayPal Working Capital loan, you should assume your data was in that exposed window and act accordingly.
Money Was Stolen — PayPal Confirms Unauthorized Transactions
Here's where it gets even more serious. PayPal also detected unauthorized transactions on the accounts of a small number of customers as a direct result of the incident and has issued refunds to those affected. (Bleeping Computer)
So yes — actual money was taken from real people's accounts. PayPal says it has refunded those customers. But refunds don't undo the stress, the fear, or the time lost dealing with fraud. And refunds certainly don't undo the fact that your SSN is now potentially circulating in places it should never be.
The issue first came to light when several users reported suspicious activity in their accounts, including unauthorized transactions and unexpected password resets (The Register) — meaning real customers noticed something was wrong before the company's own systems caught it. That detail alone tells you a lot about how these situations unfold in the real world.
How Many People Were Affected?
PayPal has been careful — some would say suspiciously careful — about the numbers. A PayPal spokesperson stated that "approximately 100 customers who were potentially impacted" were notified, stressing that its systems were not broadly compromised.
But here's the thing: 100 people sounds small. Until you're one of them. And until you realize that 100 people's Social Security numbers, paired with their full names and dates of birth, is more than enough to create cascading fraud that affects not just those individuals, but their families, their employees, their business partners.
The limited backlash may be due to the narrow scope of users impacted, as PayPal Working Capital loans are only of interest to a small minority of PayPal users. But cybersecurity experts note that the scope of damage from an SSN breach is never limited to the moment of exposure — these credentials are traded, resold, and weaponized for years.
PayPal's Own Contradictions — "Our Systems Were Not Compromised"
There's a contradiction buried in PayPal's official statements that deserves scrutiny.
PayPal's notification letters to affected customers referred to "unauthorized access to PayPal's systems," while a company spokesperson later stated that "PayPal's systems were not compromised." This apparent contradiction has raised important questions about whether the breach was caused by a technical vulnerability, a system misconfiguration, or a third-party exposure.
So which is it? Unauthorized people accessed customer data — including Social Security numbers — for six months. Passwords were reset. Refunds were issued for money stolen from accounts. And yet PayPal insists its systems were not compromised.
It's corporate language designed to limit liability, and it's worth remembering when you assess how seriously to take PayPal's reassurances going forward.
PayPal says its systems were not compromised — yet it reset passwords and is offering two years of credit monitoring. (HotHardware) Those two things don't quite add up, do they?
What PayPal Has Done So Far
To be fair, once PayPal discovered the breach, it moved quickly to contain it:
After detecting the unauthorized access, the company launched an investigation, blocked the intrusion, and reset affected passwords. PayPal also announced the implementation of stronger security checks. The company confirmed that a small number of customers observed unauthorized transactions, which have already been refunded. The company also offers impacted users two years of complimentary credit monitoring and identity restoration services through Equifax.
That two-year credit monitoring offer is meaningful — but only if you actually use it.
The monitoring package includes daily Equifax credit report access, three-bureau monitoring with email notifications, WebScan dark web alerts for SSN and financial account numbers, automatic fraud alerts, and up to $1,000,000 in identity theft insurance coverage. Affected users must enroll using their provided unique activation code before the June 30, 2026 deadline.
If you received a notification letter from PayPal, that activation code is in your letter. Do not lose it. Enroll now.
Whether or not you've received an official notification from PayPal, here is your action plan. If you've ever used PayPal Working Capital or suspect your data may have been touched, treat yourself as affected and follow every step below.
Step 1: Reset Your PayPal Password Immediately
Go to PayPal.com right now. Log in and change your password to something completely new — not a recycled password you've used on another site, not a variation of your old one. Use a mix of letters, numbers, and symbols and make it at least 12 characters long. PayPal reminded users that the company will never request account credentials, passwords, or one-time authentication codes via call, text, or email so if anyone contacts you claiming to be PayPal and asking for your password, it is a scam.
Step 2: Enable Two-Factor Authentication (2FA)
This is non-negotiable. Go into your PayPal security settings and turn on two-factor authentication. This means that even if a criminal has your password, they cannot access your account without a second code sent to your phone. It takes two minutes to set up and could save you thousands.
Step 3: Check Your Account for Unauthorized Transactions
Log into PayPal and scroll through your full transaction history. Look for anything you don't recognize — even small amounts. Fraudsters often test an account with tiny transactions before making larger ones. Report anything suspicious immediately through PayPal's Resolution Center.
Step 4: Enroll in the Free Equifax Credit Monitoring (If You Received a Letter)
Affected users should enroll in complimentary three-bureau credit monitoring through Equifax by June 30, 2026. Use the activation code included in your breach notification letter and visit Equifax's website to complete enrollment. This service will alert you if anyone tries to open credit accounts in your name.
Step 5: Place a Fraud Alert or Credit Freeze on Your Credit Reports
You don't need to wait for PayPal to tell you your data was exposed. Anyone can place a free fraud alert with all three credit bureaus — Equifax, Experian, and TransUnion — at no cost. A credit freeze is even stronger: it completely locks your credit file so no new accounts can be opened in your name without your explicit permission. You can freeze and unfreeze your credit for free at any time.
Step 6: Monitor Your Credit Reports
Visit AnnualCreditReport.com — the only federally authorized free credit report website — and pull your reports from all three bureaus. Look for accounts you didn't open, hard inquiries from lenders you didn't contact, or addresses you've never lived at. These are red flags for identity theft.
Step 7: Watch Out for Phishing Emails and Phone Scams
This is critical. Because the exposed data included Social Security numbers and dates of birth, it raises the risk of targeted social engineering and account takeover attempts. In the weeks and months following any data breach, cybercriminals use the stolen information to craft convincing fake emails and phone calls pretending to be PayPal, your bank, the IRS, or even Social Security Administration. They already know your name, your SSN, maybe your address. Be skeptical of any unsolicited contact claiming to need your information or asking you to "verify" your account details.
Step 8: Consider Identity Theft Protection Services
If you're among the affected users and you're particularly concerned, consider a paid identity theft protection service that monitors the dark web for your SSN. Services like LifeLock, Aura, or IdentityForce can alert you if your stolen data turns up on dark web marketplaces where criminals buy and sell personal information.
Step 9: Report Any Fraud to the FTC
If you discover that someone has used your information to commit fraud — opened accounts in your name, filed a fraudulent tax return, or otherwise stolen your identity — report it immediately at IdentityTheft.gov, which is run by the Federal Trade Commission. This creates an official recovery plan and gives you legal standing to dispute fraudulent accounts.
The Bigger Picture — This Is Bigger Than 100 People
PayPal's figure of "approximately 100 customers" affected may be technically accurate for this specific incident. But let's zoom out.
This is not the first time PayPal has been at the center of a major breach. This data incident follows an earlier — and much worse — PayPal breach that also occurred in December, during which "unauthorized parties" accessed customers' accounts using their valid login credentials. In that 2022 security snafu, personal information belonging to 35,000 PayPal users was exposed, including customers' names, addresses, Social Security numbers, individual tax identification numbers, and dates of birth.
There is a pattern here. And for a company that processes hundreds of billions of dollars in transactions and holds the financial data of hundreds of millions of people globally, the pattern is not reassuring.
The fundamental lesson from breaches like this one is something cybersecurity professionals have been saying for years: no platform is too big to fail its users on security. Your data is only as safe as the weakest line of code inside any company you trust with it.
Final Word — Don't Wait for PayPal to Tell You What to Do
PayPal notified affected customers more than two months after discovering this breach. Two months during which criminals may have already been using your data. Two months during which your Social Security number may have already changed hands on the dark web.
The lesson is simple: don't rely on companies to protect you after the fact. Take control of your own digital security today. Reset your passwords — not just on PayPal, but everywhere. Enable two-factor authentication on every financial account you own. Freeze your credit if you haven't already. And stay alert.
Because the people who got hold of this data are not going to be idle.