Recently, Cloudstar confirmed a data security incident stemming from a ransomware attack. Because the cloud-hosting service provider retained consumer information on behalf of its business clients, the cyberattack may have impacted those who had no idea Cloudstar was in possession of their information.

If you received a data breach notification, it is essential you understand what is at risk. More about our investigation into this breach, and what you can do if your data was stolen, is available here.

Last year, 1,862 data breaches affected more than 189 million people. On average, victims of identity theft spend 200 hours and over $1,300 recovering their identity. Many victims also suffer emotional distress, credit damage, and may even end up with a criminal record. Taking immediate action is the best way to prevent the worst consequences of a data breach.

What We Know So Far About the Cloudstar Data Breach

According to a notice posted on the company’s website, on July 16, 2021, Cloudstar began experiencing “a service interruption” impacting many of the company’s business clients. On July 18, 2021, Cloudstar confirmed that the incident was related to a ransomware attack. Over the course of the following months, Cloudstar worked to restore its systems. However, whether any consumer data was available to the hackers orchestrating the attack remains an open question.

Cloudstar has not yet issued a data breach letter explaining the impact of the ransomware attack or the effect it had on the data of its client’s customers. However, several Cloudstar customers have cited the Cloudstar breach in letters to their customers, explaining that it exposed their personal and sensitive information to unauthorized access.

Cloudstar is a cloud hosting service provider based in Jacksonville, Florida. The company provides various IT security and consulting services on behalf of its business clients, as well as cloud backup services. Cloudstar specializes in serving clients in regulated industries, such as law firms, title companies, mortgage companies and healthcare providers. Cloudstar is owned by the holding company Keystone Management Group, LLC, which also owns several other companies, including Mortgage Phish, Diologix and Teletonix Communications. Keystone Management Group has approximately 23 employees and generates roughly $11 million in annual revenue.

More About the Causes and Risks of Data Breaches

Often, data breaches are the result of a hacker gaining unauthorized access to a company’s computer systems with the intention of obtaining sensitive consumer information. While no one can know the reason why a hacker targeted Cloudstar, it is common for hackers and other criminals to identify those companies believed to have weak data security systems or vulnerabilities in their networks.

Once a cybercriminal gains access to a computer network, they can then access and remove any data stored on the compromised servers. While in most cases a company experiencing a data breach can identify which files were accessible, there may be no way for the company to tell which files the hacker actually accessed or whether they removed any data.

While the fact that your information was compromised in a data breach does not necessarily mean it will be used for criminal purposes, being the victim of a data breach puts your sensitive data in the hands of an unauthorized person. As a result, you are at an increased risk of identity theft and other frauds, and criminal use of your information is a possibility that should not be ignored.

Given this reality, individuals who receive a Cloudstar data breach notification should take the situation seriously and remain vigilant in checking for any signs of unauthorized activity. Businesses like Cloudstar are responsible for protecting the consumer data in their possession. If evidence emerges that Cloudstar failed to adequately protect your sensitive information, you may be eligible for financial compensation through a data breach lawsuit.

What Are Consumers’ Remedies in the Wake of the Cloudstar Data Breach?

When customers decided to do business with Cloudstar, they assumed that the company would take their privacy concerns seriously. And it goes without saying that consumers would think twice before giving a company access to their information if they knew it wasn’t going to be secure. Thus, data breaches such as this one raise questions about the adequacy of a company’s data security system.

When a business, government entity, non-profit organization, school, or any other organization accepts and stores consumer data, it also accepts a legal obligation to ensure this information remains private. The United States data breach laws allow consumers to pursue civil data breach claims against organizations that fail to protect their information.

Of course, given the recency of the Cloudstar data breach, the investigation into the incident is still in its early stages. And, as of right now, there is not yet any evidence suggesting Cloudstar is legally responsible for the breach. However, that could change as additional information about the breach and its causes is revealed.

If you have questions about your ability to bring a data breach class action lawsuit against Cloudstar, reach out to a data breach attorney as soon as possible.

What Should You Do if You Receive a Cloudstar Data Breach Notification?

If Cloudstar sends you a data breach notification letter, you are among those whose information was compromised in the recent breach. While this isn’t a time to panic, the situation warrants your attention. Below are a few important steps you can take to protect yourself from identity theft and other fraudulent activity:

1. Identify What Information Was Compromised: The first thing to do after learning of a data breach is to carefully review the data breach letter sent. The letter will tell you what information of yours was accessible to the unauthorized party. Be sure to make a copy of the letter and keep it for your records. If you have trouble understanding the letter or what steps you can take to protect yourself, a data breach lawyer can help.

2. Limit Future Access to Your Accounts: Once you determine what information of yours was affected by the breach, the safest play is to assume that the hacker orchestrating the attack stole your data. While this may not be the case, it’s better to be safe than sorry. To prevent future access to your accounts, you should change all passwords and security questions for any online account. This includes online banking accounts, credit card accounts, online shopping accounts, and any other account containing your personal information. You should also consider changing your social media account passwords and setting up multi-factor authentication where it is available.

3. Protect Your Credit and Your Financial Accounts: After a data breach, companies often provide affected parties with free credit monitoring services. Signing up for the free credit monitoring offers some significant protections and doesn’t impact any of your rights to pursue a data breach lawsuit against the company if it turns out they were legally responsible for the breach. You should contact a credit bureau to request a copy of your credit report—even if you do not notice any signs of fraud or unauthorized activity. Adding a fraud alert to your account will provide you with additional protection.

4. Consider Implementing a Credit Freeze: A credit freeze prevents anyone from accessing your credit report. Credit freezes are free and stay in effect until you remove them. Once a credit freeze is in place, you can temporarily lift the freeze if you need to apply for any type of credit. While placing a credit freeze on your accounts may seem like overkill, given the risks involved, it’s justified. According to the Identity Theft Resource Center (“ITRC”), placing a credit freeze on your account is the “single most effective way to prevent a new credit/financial account from being opened.” However, just 3% of data breach victims place a freeze on their accounts.

5. Regularly Monitor Your Credit Report and Financial Accounts: Protecting yourself in the wake of a data breach requires an ongoing effort on your part. You should regularly check your credit report and all financial account statements, looking for any signs of unauthorized activity or fraud. You should also call your banks and credit card companies to report the fact that your information was compromised in a data breach.

Below is a copy of the notice describing the cyberattack that was posted on the Cloudstar website:

Dear [Consumer],

What happened: On Friday, July 16, Cloudstar discovered it was the victim of a highly sophisticated ransomware attack. Due to the nature of this attack, at this time our systems are currently inaccessible, and although we are working around the clock, we do not have a definitive restoration timeline. Our Office 365 mail services, email encryption offering and some support services are still fully operational.

What we are doing: Cloudstar has retained third-party forensics experts Tetra Defense to assist us in our recovery efforts and also informed law enforcement. Negotiations with the threat actor are ongoing. Additionally, we have informed all of our customers and are committed to helping them through this and working in the best interest of the industry. We will continue to investigate this incident and provide updates to our customers as we have additional information to share.

What is next: We are working diligently to address this matter as quickly as possible and will keep our stakeholders informed. As we continue to investigate and respond to this incident, we will provide updates as appropriate.

This is an incredibly difficult time for Cloudstar but more importantly, for our customers, whose trust we value so highly. Please check back for updates.