The hidden data risk inside every AI prompt
Your employees are almost certainly using AI tools at work. According to recent surveys, over 75 percent of knowledge workers have used generative AI in a professional context, and many are doing so without their employer's knowledge or approval. While the productivity benefits of AI are real, so is a risk that most businesses have not addressed: data leakage through AI platforms.
How Data Leakage Actually Happens
AI data leakage rarely involves malicious intent. It happens when well-meaning employees use publicly available AI tools to get their work done faster. The scenarios are alarmingly common and easy to overlook.
Consider a sales manager who pastes an entire customer list — names, email addresses, phone numbers, purchase history — into ChatGPT and asks it to clean up formatting inconsistencies. Or an accountant who uploads quarterly financial statements to an AI summarizer to quickly generate talking points for a board meeting. Or a software developer who copies proprietary application code into an AI coding assistant to help debug an issue. In each case, the employee is trying to be productive. In each case, sensitive business data has just been sent to a third-party platform that the business does not control.
What Happens to Your Data Once It's Submitted
This is where the risk becomes serious. Many consumer-grade AI tools retain the data submitted to them. Depending on the platform's terms of service, that data may be stored on their servers, reviewed by their staff, or used to train and improve future versions of the AI model. That means your proprietary information, customer data, or financial details could theoretically influence responses given to other users — including your competitors. Even platforms that claim not to use data for training may retain it for abuse monitoring, debugging, or other purposes that still expose your information beyond your control.
Real-World Incidents: The Samsung Case and Beyond
This is not a theoretical concern. In one of the most widely reported incidents, Samsung engineers inadvertently leaked proprietary semiconductor source code and internal meeting notes by pasting them into ChatGPT. The company subsequently banned the use of generative AI tools entirely — a drastic response that highlights how seriously large organizations take this risk. Similar incidents have been reported across industries, from law firms accidentally submitting confidential client information to healthcare workers sharing patient details while seeking help drafting clinical notes. Each incident underscores the same point: the data exposure happens the moment the information is submitted, and it cannot be undone.
Technical Controls You Should Implement
The good news is that you do not have to choose between banning AI and accepting the risk. Several technical controls can help your business use AI productively while protecting sensitive data.
Data Loss Prevention (DLP) policies can be configured to detect and block sensitive data — such as Social Security numbers, credit card numbers, or files marked as confidential — from being uploaded to unauthorized AI platforms. Modern DLP tools can monitor browser activity and cloud application usage in real time.
Cloud Access Security Broker (CASB) tools provide visibility into which cloud and AI applications employees are using, even when those applications have not been formally approved. A CASB can identify shadow AI usage across your organization and enforce access policies that restrict or block specific platforms.
Endpoint monitoring solutions can track AI tool usage at the device level, logging when employees access AI platforms and what types of data interactions occur. This monitoring provides an audit trail and helps identify risky behavior before a breach occurs.
Web filtering and application control policies can restrict access to consumer AI tools altogether, channeling employees toward approved enterprise alternatives that offer stronger data protection guarantees.
The Enterprise AI Agreement Advantage
One of the most important steps a business can take is to establish enterprise agreements with AI vendors. Enterprise tiers of platforms like Microsoft Copilot, Google Gemini for Workspace, and OpenAI's ChatGPT Enterprise include contractual commitments that your data will not be used for model training, will be encrypted at rest and in transit, and will be subject to your organization's data retention and deletion policies. The difference between consumer and enterprise AI is not just about features — it is about legal and contractual data protection that consumer versions simply do not provide.
Building an AI Acceptable Use Policy
Technical controls are essential, but they must be paired with clear policies and employee training. Your organization needs an AI acceptable use policy that defines which AI tools are approved for business use, what types of data can and cannot be submitted to AI platforms, how employees should handle AI-generated outputs, and the consequences of violating the policy. Training should include specific examples of risky behavior and practical alternatives so employees understand not just the rules, but the reasoning behind them.
Key Takeaways
- Consumer-grade AI tools may retain, review, or use submitted data for model training — enterprise agreements provide contractual data protection that consumer versions do not.
- DLP policies, CASB tools, endpoint monitoring, and web filtering provide layered technical controls to prevent sensitive data from reaching unauthorized AI platforms.
- Pair technical controls with a clear AI acceptable use policy and employee training to address both the technology and human behavior sides of the risk.
Taking Action Before a Breach Forces Your Hand
AI data leakage is one of the most significant and underappreciated risks facing businesses today. The organizations that address it proactively — with a combination of enterprise AI agreements, technical controls, clear policies, and employee training — will be far better positioned than those that wait for an incident to force their hand. If you are not sure where your business stands on AI data security, Wallace and White can help you assess your exposure and implement the right protections. Reach out to us to start the conversation.