Power

The ransomware dilemma: To pay or not to pay?

Ransomware victims face a "devil's bargain" over paying demands.

A screen showing a ransomware message

Everyone says you shouldn't pay hackers. But it's not always that simple.

Photo: Alexander Ryumin via Getty Images

Ransomware victims often find themselves in what feels like an impossible position: There are endless decisions to be made, but it's a race against the clock to save computer systems and data.

That's what New Orleans city officials learned firsthand in the early morning hours on a Friday in December. At 6 a.m., there was a blip of suspicious activity on the city's cybersecurity alert system — not a definite sign of attack, but an early warning of what would come, the city's chief information officer Kim Walker LaGrue recounted in an interview with Protocol. At about 9 a.m., when many city employees started arriving to work, there was an uptick in reports of unusual behavior on their computers.

Get what matters in tech, in your inbox every morning. Sign up for Source Code.

By 11 a.m., the diagnosis was clear: Ransomware was spreading through the network. The malicious code was encrypting devices and information, rendering them inaccessible unless city officials decided to contact the attackers. Presumably, they would then get instructions about paying a ransom.

City officials had a game plan in place to guide them through some of the toughest decisions ransomware victims face — the biggest being whether or not to pay the demand. The Louisiana state government and three of its school districts were hit by two separate ransomware attacks in 2019, so New Orleans officials had prepared and rehearsed an incident response plan.

The first step LaGrue took — before she even consulted with the mayor — was to disconnect all city systems from the internet. More than 3,000 computers and 400 servers were shut down to prevent the malicious code from spreading, she said.

"We sounded every type of alarm we could," LaGrue said. The city declared a state of emergency within about 30 minutes of identifying the attack, she added. Within an hour, the FBI and other state and federal agencies were on the ground to help respond to the attack. Normal lines of communication — including the city's email system — were inaccessible, and a war room was set up to help relay information.

City officials knew early on that they would not engage with the attackers and that no ransom would be paid. The U.S. Conference of Mayors, of which New Orleans Mayor LaToya Cantrell is a member, last year adopted a resolution opposing such payments after cities including Baltimore and Atlanta were hit by ransomware attacks. Additionally, the FBI discourages organizations from paying ransomware demands, arguing that it incentivizes crime, emboldens attackers and is sometimes futile — attackers on occasion don't decrypt the data after a payment is made.

Because it didn't pay the attackers, New Orleans is still recovering; LaGrue estimates that it will take another four months to make a full recovery. So far, her staff has focused on restoring key priorities. The first step was inspecting and cleaning thousands of government computers, and removing ones that were too old to run up-to-date software, she said. Over the last month, the city has focused on restoring data from backups, as well as services including email and printing. Over the last few weeks, the city's IT staff has been particularly focused on assisting the city's infrastructure and public safety agencies in their preparations for Mardi Gras on Tuesday.

The financial impact of the attack is still uncertain. A city spokesperson said that the current estimated cost of the attack is $7.2 million, adding that he "wouldn't be shocked if it got higher." The city has a $3 million cyber insurance policy that will help cover some of the costs, which include replacing between 500 and 800 computers as a result of the incident, LaGrue said. The city is planning to add three cybersecurity specialists to its IT staff, which currently includes 65 workers, she said.

Ransomware has been a rapidly growing problem for all types of organizations, including Fortune 500 firms and small nonprofits. The antimalware firm Malwarebytes said in August that it observed a roughly 365% spike in ransomware detections between 2018 and 2019. Municipalities, educational institutions and health care organizations are prime targets for ransomware attacks due to their lack of spending on security and outdated hardware and software, according to the report.

Because ransomware affects a range of organizations, the decision to pay can't be one-size-fits-all, according to Chris Hallenbeck, CISO for the Americas at cybersecurity firm Tanium.

"In an ideal world, no one pays the ransom," he said. "It's feeding the beast and creating an ecosystem that encourages criminals. But the reality of many organizations is that every day they're down there's massive impacts to the services they provide."

Overall, about a third of companies pay the ransom, according to security firm Emisisoft.

Which brings us to Maastricht University in the Netherlands, a recent example of an organization that decided to pay a demand after falling victim to ransomware. On Dec. 30, the university decided to pay 30 bitcoin, or about $305,000, to regain access to its systems and data.

Several factors made the attack particularly disruptive, and increased the university's incentives to pay the demand, according to a forensic report from FOX-IT, the security firm that assisted with the incident. A key factor was that attackers were able to encrypt backups for some of the university's critical systems. That meant that, without obtaining a decryption key from the attackers, the university would have to rebuild its infected systems from scratch — a process that would stall the work of students and researchers for many months. Additionally, unlike New Orleans, Maastricht University did not carry cyber insurance to help cover the costs of lengthy disruptions.

The attacker had access to the university's infrastructure for months and studied it to figure out how to maximize damage. They first gained access through a phishing email on Oct. 15 that instructed someone in the university community to sign an attached document and scan it back to the sender. Upon clicking the attachment, malware was installed that gave the attacker administrative access to the device.

On Nov. 21, while scanning the university's network, the attacker found a server with missing security updates and used it to obtain full access to the organization's infrastructure. On Dec. 23, the attacker deployed the Clop ransomware variant on 267 servers. The timing was particularly challenging for the university: Most faculty, students and support staff were away for the holiday break. Employees from IT, facilities, communications and a range of other departments had to skip part of their holiday to respond to the emergency, according to a spokesperson. One week after the ransomware was installed, the university decided to pay the ransom.

Nick Bos, vice president of the university's executive board, said in the report that the decision to pay the demand was a "devil's bargain": The university would have to live with the ethical issues that come from paying criminals in order to resume operations, research and studies.

At a symposium this month attended by students and faculty, Bos said the risks of losing the data were so great that the university did not attempt to negotiate with the attackers; administrators wanted the process to be as calm as possible, he said.

Bos said he was confident that paying the demand was the right choice. About five weeks after paying the demand, students and faculty were able to access almost all of the university's technologies, as well as attend classes and take exams.

"We felt, in consultation with our management and our supervisory bodies, that we could not make any other responsible choice when considering the interests of our students and staff," Bos said in the report.

Climate

A pro-China disinformation campaign is targeting rare earth miners

It’s uncommon for cyber criminals to target private industry. But a new operation has cast doubt on miners looking to gain a foothold in the West in an apparent attempt to protect China’s upper hand in a market that has become increasingly vital.

It is very uncommon for coordinated disinformation operations to target private industry, rather than governments or civil society, a cybersecurity expert says.

Photo: Goh Seng Chong/Bloomberg via Getty Images

Just when we thought the renewable energy supply chains couldn’t get more fraught, a sophisticated disinformation campaign has taken to social media to further complicate things.

Known as Dragonbridge, the campaign has existed for at least three years, but in the last few months it has shifted its focus to target several mining companies “with negative messaging in response to potential or planned rare earths production activities.” It was initially uncovered by cybersecurity firm Mandiant and peddles narratives in the Chinese interest via its network of thousands of fake social media accounts.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).

Some of the most astounding tech-enabled advances of the next decade, from cutting-edge medical research to urban traffic control and factory floor optimization, will be enabled by a device often smaller than a thumbnail: the memory chip.

While vast amounts of data are created, stored and processed every moment — by some estimates, 2.5 quintillion bytes daily — the insights in that code are unlocked by the memory chips that hold it and transfer it. “Memory will propel the next 10 years into the most transformative years in human history,” said Sanjay Mehrotra, president and CEO of Micron Technology.

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.
Fintech

Ripple’s CEO threatens to leave the US if it loses SEC case

CEO Brad Garlinghouse said a few countries have reached out to Ripple about relocating.

"There's no doubt that if the SEC doesn't win their case against us that that is good for crypto in the United States,” Brad Garlinghouse told Protocol.

Photo: Stephen McCarthy/Sportsfile for Collision via Getty Images

Ripple CEO Brad Garlinghouse said the crypto company will move to another country if it loses in its legal battle with the SEC.

Garlinghouse said he’s confident that Ripple will prevail against the federal regulator, which accused the company of failing to register roughly $1.4 billion in XRP tokens as securities.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Google Voice at (925) 307-9342.

Policy

The Supreme Court’s EPA ruling is bad news for tech regulation, too

The justices just gave themselves a lot of discretion to smack down agency rules.

The ruling could also endanger work on competition issues by the FTC and net neutrality by the FCC.

Photo: Geoff Livingston/Getty Images

The Supreme Court’s decision last week gutting the Environmental Protection Agency’s ability to regulate greenhouse gas emissions didn’t just signal the conservative justices’ dislike of the Clean Air Act at a moment of climate crisis. It also served as a warning for anyone that would like to see more regulation of Big Tech.

At the heart of Chief Justice John Roberts’ decision in West Virginia v. EPA was a codification of the “major questions doctrine,” which, he wrote, requires “clear congressional authorization” when agencies want to regulate on areas of great “economic and political significance.”

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.

Enterprise

Microsoft and Google are still using emotion AI, but with limits

Microsoft said accessibility goals overrode problems with emotion recognition and Google offers off-the-shelf emotion recognition technology amid growing concern over the controversial AI.

Emotion recognition is a well-established field of computer vision research; however, AI-based technologies used in an attempt to assess people’s emotional states have moved beyond the research phase.

Photo: Microsoft

Microsoft said last month it would no longer provide general use of an AI-based cloud software feature used to infer people’s emotions. However, despite its own admission that emotion recognition technology creates “risks,” it turns out the company will retain its emotion recognition capability in an app used by people with vision loss.

In fact, amid growing concerns over development and use of controversial emotion recognition in everyday software, both Microsoft and Google continue to incorporate the AI-based features in their products.

“The Seeing AI person channel enables you to recognize people and to get a description of them, including an estimate of their age and also their emotion,” said Saqib Shaikh, a software engineering manager and project lead for Seeing AI at Microsoft who helped build the app, in a tutorial about the product in a 2017 Microsoft video.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins