As a result of these security shortcomings, a hacker was able to access a customer's database hosted by Blackbaud in early 2020. The breach, which remained undetected for three months, allowed the hacker to extract substantial amounts of unencrypted sensitive consumer data belonging to Blackbaud's clients.
Blackbaud Inc., headquartered in South Carolina, has reached a settlement with the Federal Trade Commission (FTC) following allegations that the company's inadequate security measures led to a data breach compromising the personal information of numerous individuals, including Social Security and bank account numbers.
According to the FTC's complaint, Blackbaud, a provider of data services and software to various entities, failed to implement proper safeguards to protect the extensive personal data it handles for its clients. Despite assuring customers of robust security measures, Blackbaud neglected to put in place adequate protections. This included a lack of monitoring for attempted network breaches, insufficient data segmentation, failure to delete unnecessary data, inadequate implementation of multifactor authentication, and lax password policies for employee accounts.
As a result of these security shortcomings, a hacker was able to access a customer's database hosted by Blackbaud in early 2020. The breach, which remained undetected for three months, allowed the hacker to extract substantial amounts of unencrypted sensitive consumer data belonging to Blackbaud's clients.
“As the order finds, Blackbaud failed to disclose the full impact of a ransomware attack despite its personnel learning that its earlier public statements about the attack were erroneous,” said David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit. “Public companies have an obligation to provide their investors with accurate and timely material information; Blackbaud failed to do so.”
Furthermore, Blackbaud's response to the breach was deemed inadequate. The company opted to pay a ransom to the hacker without verifying the deletion of stolen data. It also delayed notifying affected customers for nearly two months, and when it did, downplayed the extent of the breach, leaving consumers vulnerable to potential identity theft and other harms.
As part of the settlement, Blackbaud will be required to delete unnecessary personal data, develop a comprehensive information security program, and implement a data retention schedule. The proposed order also prohibits the company from misrepresenting its data security and retention policies.
The FTC voted unanimously to issue the administrative complaint and accept the proposed consent agreement with Blackbaud. The agreement will be open to public comment for 30 days before the Commission makes a final decision. Each violation of the consent order may result in civil penalties.
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