Two fresh lawsuits were recently filed against the Texas-based cloud enterprise Rackspace after it disclosed that it was hit by a targeted ransomware attack. Wherever your business is based, ransomware attacks can be exceptionally damaging. Lawsuits from data subjects whose personal information is exposed and fines from data regulators can add up to millions. However, the long-term consequences of an attack can be even more detrimental leading to a loss of company reputation and business and a fall in stock value.
A ransomware attack launched
The Hosted Exchange environment of Rackspace began experiencing issues on Friday, December 2, 2022. A day later the cloud company revealed it was currently dealing with a cybersecurity incident that had compelled it to entirely close down its devoted hosted Microsoft Exchange service.
Soon after, the company established that the event it had suffered was due to ransomware, however it didn’t reveal further details. It remains unclear exactly which ransomware gang was the cause of the attack on Rackspace, whether any company or customer data was exposed, or if the cloud company has any plans to pay the ransom demand.
Following its initial statement, Rackspace warned its customers that cybercriminals, and other scammers beyond those responsible for the ransomware attack, might potentially be attempting to exploit the event. Customers have now been notified that they should be on the lookout for any malicious phone calls or emails that are designed to fool them into supplying information of a personal and private nature.
Results of a ransomware attack
As a result of the incident, two or more different class action lawsuits have already been filed against Rackspace. While the Texas firm has not verified details of any private data being compromised, Cole & Van Note, a legal company based in California, has now filed a suit against it, describing the actions on its systems as a data breach. Entitled “Stephenson et al. v. Rackspace Technology, Inc.” the class action lawsuit was filed within the Western District of Texas.
Principal attorney for the case, Scott Cole, commented on the lawsuit:
“Despite hundreds of data breaches every year in this country, I am receiving reports of vulnerabilities in Rackspace’s hosting environment that go back over a year. That, and a seeming lack of backup protocols is why a lawsuit like this is critical.”
Another class action was filed against the company within the Western District of Texas. This time by Chris Ondo, who accused Rackspace of not protecting its customers’ data and providing below-par communication with its customers in regard to the attack. This suit is looking for over $5 million in damages.
In the fallout of the cybersecurity lapse at Rackspace, the company’s shares plunged.
Until a time when the Hosted Exchange environment is completely restored, affected customers of Rackspace have been offered substitutes. However, the cloud company admitted that the Hosted Exchange business, generating around $30 million each year, could now lose substantial revenue because of the attack.