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The vulnerabilities that proxy servers face. Risks of data breach and Security hack. When using a proxy server, all traffic and data from the user's computer going to the intended website are all captured by the third party proxy server. These third-party servers are not always recognizable or reliable and the data received by and released from the user's device is not always encrypted. Thus, malicious proxy servers can potentially record all the data heading from and towards the device and hijack sensitive details such as usernames and passwords of your online accounts.