The Expert Podcast

Introduction
  • Recent news highlights major ransomware and cyber attacks, such as the CDK Automotive and AT&T hacks.
  • These attacks impact millions and involve hackers locking down company systems.
How Ransomware Attacks Work
  • Hackers infiltrate systems, lock them, and demand a ransom to restore access.
  • Companies face the choice of paying the ransom or spending time and money to recover, often weighing the cost-benefit of paying.
Risks of Paying Ransoms
  • Increased Ransom Demands
    • Hackers may increase ransom demands over time, potentially making it an unsustainable practice.
  • Regulatory and Legal Risks
    • Foreign Corrupt Practices Act (FCPA)
      • This law prohibits bribes to foreign officials, which might extend to paying ransoms if hackers are linked to foreign governments.
    • Funding Illegal Activities
      • Ransom payments could inadvertently support terrorism or other illegal activities.
    • Money Laundering
      • Payments made through cryptocurrencies or complex transactions could be scrutinized for money laundering.
The Role of Cyber Liability Insurance
  • Many companies use cyber liability insurance to handle ransom payments and mitigate legal risks.
  • Insurance companies are adept at managing these transactions to avoid issues like bribery or money laundering.
Future Implications
  • Increasing ransom payments might prompt government intervention.
  • Potential for future regulations or prosecutions to deter companies from paying ransoms.
Case Study
  • CDK Automotive hack involved a $25 million ransom paid in Bitcoin.
Conclusion
  • The ongoing rise in ransomware payments and future government responses will shape how companies and hackers interact.
Call to Action
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Contact and Feedback
  • Questions or comments? Leave them in the link below.
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What is The Expert Podcast?

The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.

Ransomware and Cyber Attacks

Ransomware and cyber attacks have been all over the news lately. Whether it's the CDK Automotive dealership hack or the big AT&T hack, these are significant events that affect millions of people. With these attacks, companies are targeted by hackers who get into their systems, lock them down, and demand a ransom to unlock them.

The company has a couple of decisions to make: they can either not pay the ransom and spend a lot of time and money trying to unfreeze their system, all while the hackers may delete files or share private information on the dark web, or they can pay the ransom and get it over with. Many times, companies find it more cost-effective to pay the ransom, considering it a cheaper option. However, paying these ransoms could lead companies into trouble.

First, hackers might start demanding higher ransoms over time. While they have generally been unlocking systems after payment, there's a risk that they could increase their demands or fail to unlock the system, thereby making companies reluctant to pay. This could also lead to a situation where paying ransoms becomes a norm, encouraging more attacks.

Second, there are regulatory and legal risks associated with paying ransoms. The Foreign Corrupt Practices Act (FCPA) makes it illegal to pay bribes to foreign government officials. While hackers are not technically part of any government, if it’s discovered that they are working with a government or under its approval, paying them could lead to legal trouble for companies.

Another risk involves the possibility that the ransom money could be used for terrorism or other illegal activities. If the hacking group is using the money for such purposes, companies paying the ransom could inadvertently fund illegal activities. Additionally, if the payment involves money laundering through cryptocurrency or complex transactions, there could be legal issues related to money laundering.

While these risks are not fully tested yet, the government might eventually focus on how companies handle ransom payments. Many companies now have cyber liability insurance, which manages these payments and avoids legal complications by structuring the payment process carefully.

The question remains about how far the legal gray area will stretch before a ransom payment is considered illegal. It will be interesting to see if the government introduces regulations or prosecutions to set an example and discourage ransom payments, ultimately reducing the market for hackers. With the volume and extent of ransomware payments rising, including cases like the $25 million ransom paid in Bitcoin in the CDK hack, future government actions will be closely watched.

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