In April, we discussed infamous dating website Ashley Madison’s parent company Avid Life Media’s (ALM) decision to go public in Europe, rather than America, because of Europe’s supposedly more tolerant attitude towards adultery. But now this somewhat dubious claim may never be tested, as Ashley Madison battles the repercussions of a hacking of their system by ‘The Impact Team’. A data breach of this size, where 37 million user records were stolen, is in itself a public relations catastrophe. But a company’s response is the key to minimising damage, and ALM’s response has been nothing short of disastrous.
There was a somewhat promising initial reaction, where ALM Chief Executive Noel Biderman confirmed to Brian Krebs of Krebs on Security that the hack had happened, but that the company was “working diligently and feverishly” to remove the data. And it seems they were successful - within 30 minutes of Krebs talking to Biderman, several of the links no longer worked.
But with the information already hacked, ALM couldn’t prevent the inevitable. On 15 August the Ashley Madison database was leaked. However, instead of working to mitigate the damage, or at the very least apologising, Raja Bhatia, Ashley Madison’s original founding Chief Technology Officer, did what you might expect a cheating spouse to do: he initially denied the authenticity of the database, stating that it must be false because it contained credit card details, which he claimed Ashley Madison did not have records of. So when clients confirmed the database did in fact contain their details, it left Ashley Madison in an awkward public situation – one which many of their users might now be familiar with.
Avid Life has now been forced to act, but their efforts, including offering their paid-delete service to clients for free, and a reward of $500,000 for intelligence on who may be responsible, are ‘too little, too late’. Investment bankers have already said the Company can “kiss its IPO plans good-bye”. The stolen information will likely have repercussions for clients beyond the financial; jobs, family and reputation could all be lost, and it seems unlikely that the Ashley Madison brand will be able to recover from such a devastating breach of client confidentiality. Ironically, it seems that Avid Life media is about to find out that broken trust can make it impossible to repair (client) relationships. edit.