What Happens to Your Stolen Password
So, your password’s been stolen.
Maybe you got an alert in your work email, or a company you have an account with announced a breach. You change your password, make a new strong password, and move on with your life.
But have you ever wondered what really happens when your password is stolen? It’s not like your password is a physical thing stolen out of your pocket.
In this blog, we’ll walk you through step by step what happens after your password is stolen. That way, you’ll know exactly how the process works, and fully understand why it’s not only critical to act fast after a breach but to practice good habits before it ever happens.
Step 1: The Breach
Here’s where it all goes wrong.
Your password is hanging out, protecting your account as it should, when suddenly a breach happens. A breach happens when personal, financial, or intellectual data is accessed or disclosed by an unauthorized party. Basically, it’s someone accessing information that they aren’t supposed to. And right then, your password was abducted by hackers.
Breaches can happen in a few ways:
Hacked websites: A site you use may have been quietly compromised, with attackers harvesting usernames and passwords for months before anyone notices – like the LastPass breach between 2022 and 2023. If you logged into a compromised website during that time, your credentials have a chance of being stolen.
Malware: A virus on your computer – or worse, across your company’s entire network – can capture every entered password and send them straight back to the hackers.
Phishing: One wrong click on a “legit-looking” link, and you may have handed over your login details directly to a hacker.
A common misconception is that breaches only happen to large enterprises. In reality, 43% of all cyber attacks target SMBs. That’s because most SMBs don’t have the resources to properly defend or react when a breach happens.
No matter how the breach occurs, the result is the same: your credentials are compromised and added to a massive stolen password database. From there, your stolen password moves on to the next stage in the cybercrime chain.
Step 2: Sold on the Dark Web
While you’re rushing to change your login, here’s what’s happening to your stolen password.
Your current password is packaged along with all the others found in the breach. From there, every stolen password is uploaded to a massive database where they’re then sold on the dark web for profit. Hackers aren’t necessarily targeting you specifically, but instead they’re selling large groups of passwords to other criminals looking to exploit them.
Once these data banks are sold, your stolen password moves on to the next stage.
Step 3: The Cracking
Now a hacker – or group of hackers – has your stolen password. Sometimes, someone buys a “password pack” that just happens to include your credentials.
Using advanced bots, hackers will try that stolen password across multiple services, usually hitting the popular accounts (like Office 365, social media, Bank websites, etc.) and then expanding to anything else they can find. That means nothing is safe: Work email, online banking, cloud storage, all of it is fair game.
That’s why having a different password for every account is so important. Unfortunately, only 78% of people admit to using the same password across multiple accounts. That’s a huge percentage for something so important.
Step 4: Hacker’s Playground
Cracking a password is just the start. Some attackers immediately loot financial accounts or sell access for a quick payday. Others use the access more strategically: they send phishing emails from your compromised account to your contacts, spreading the breach and collecting more stolen password data. Because the email appears from you (a trusted colleague or friend), those messages are more likely to be opened and acted on.
At work, an employee’s compromised account can be an entry point to sensitive documents, internal systems, and client data. From a single stolen password, attackers can move through a network and cause significant damage.
How to Stop the Cycle
We wish there was a silver-bullet fix to keep your passwords from breaches, but the truth is that’s just not the case.
That said, by layering defenses and best practices, you can scientifically reduce the chances (though not 100% eliminate) of a stolen password being used against you.
Here are the best methods:
Use unique passwords everywhere
Not Password1, Password2, Password3. You need complex, unique, passwords, or a brute force attack (a-trial-and-error form of password cracking powered by advanced computer algorithms) can render them useless. Use a password manager to keep track of them – it’s impossible to remember every login (and that’s a good thing).
Turn on multi-factor authentication (MFA)
MFA is a tried-and-true security strategy that makes you about 99% less likely to be hacked. Activate MFA at every opportunity, even if it seems like overkill (it’s not).
If you need help setting up MFA, reach out to your IT team. They’re the security experts and can help you get MFA up and running quickly.
That said, there is still that remaining 1%, and hackers continue to evolve every day, so MFA is a strong layer of protection but not a complete guarantee.
Change passwords regularly
42% of people only change their password when prompted. That’s not good enough. Regularly changing your login details reduces the risk that a stolen password can be used against you.
Stay alert for phishing attempts
This is the biggest. Hackers constantly refine their attacks, sometimes even bypassing MFA with sophisticated phishing schemes. Stay skeptical of suspicious emails, links, and messages to keep your accounts safe.
How an MSP Can Help
Even with the best practices, you can’t rely on every employee to be perfect 100% of the time. That’s why so many SMBs hire MSPs to help protect their businesses.
MSPs simply have a lot more bandwidth and resources to devote to security than your typical small business – after all, it’s what they do.
Here are just a few things you can expect when you partner with an MSP:
- Monitor the dark web for stolen company credentials.
- Enforce strong password policies and MFA across all accounts.
- Provide phishing simulations and training to keep employees sharp.
- Deploy security tools that detect and block suspicious login attempts before damage is done.
When a breach does happen, an MSP acts quickly: isolating compromised accounts, resetting credentials, and preventing attackers from spreading further inside your company network.
A Breach Doesn’t Have to End Badly
Just because your password was stolen doesn’t mean it’s the end of the world. While acting fast is important, you shouldn’t panic. By staying level-headed, you can change your passwords, alert your company and your IT team, and move forward with best practices.
Of course, prevention is the best form of defense, and that’s where an MSP has you covered.
At The 20, we provide our clients with cyber awareness training, top-tier security tools (including dark web password scanning), and MFA deployment. The best part? It’s all at a predictable flat-rate fee.
If you’re company needs protection, give us a call. We’d love to get you the defense you need.
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About The 20 MSP
As a leading provider of managed IT services, The 20 MSP serves thousands of businesses nationwide, including single and multi-location organizations, delivering white-glove service, secure and streamlined IT infrastructure, and 24/7/365 support. We believe in building lasting relationships with clients founded on trust, communication, and the delivery of high-value services for a fair and predictable price. Our client’s success is our success, and we are committed to helping each and every organization we serve leverage technology to secure a competitive advantage and achieve new growth.
