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6 Reasons to Not Pay the Ransom in a Ransomware Attack

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Dale Shulmistra

Data Protection Specialist @ Invenio IT

Published

Pay the ransom

One of the greatest threats facing businesses today is the risk of a ransomware attack. By encrypting data, hackers effectively lock companies out of their computer systems, bringing operations to a halt and in some cases forcing businesses to shutter their doors permanently.

Given these high stakes, it’s no surprise that many businesses are forced to consider giving hackers what they want: a ransom payment to decrypt the data. But should they?

In most cases, the answer is no.

Businesses should avoid paying the ransom unless they have no other viable options for survival. In this post, we explore the reasons why.

Should You Pay the Ransom? The FBI Says ‘No’

It’s never a good idea to give in to a cyber criminal’s demands. For one thing, the United States government, and more specifically the FBI, advises that companies do not pay the ransom to hackers. Ransomware attacks are a serious crime, and the act of paying the bad actors just encourages their criminal behavior to continue. We’ll have more to say on that below, but the point here is that law enforcement agencies are very clear that businesses should not pay.

The FBI warns, “The United States Government (USG) does not encourage paying a ransom to criminal actors” and doing so comes with “serious risks.” Among other things, the FBI writes, “Paying the ransom doesn’t guarantee an organization will get their data back. We have seen cases where organizations never got the decryption key after having paid the ransom.” That’s just money down the drain that most companies will never recover (along with their data if they don’t have backups).

Let’s explore this point a bit further, along with other key reasons why the FBI and cybersecurity experts warn against paying the ransom.

Reason #1: There’s No Guarantee You’ll Get the Data Back

We can’t stress this enough: paying the ransom is a gamble, not a guarantee. Hackers are under no obligation to do anything when you pay the ransom. And since payments are made anonymously via cryptocurrency transactions, they can easily just take your money and run.

For businesses, this only adds insult to injury. The hackers clearly win, and the business suffers the embarrassment of having paid up and received nothing in return.

No industry is immune to these risks. All organizations face the threat of ransomware, including healthcare, manufacturing, construction, retail, real estate, hospitality, education and financial institutions. All of them face the same risk of tossing their money down the drain when they pay the ransom.

Case in point: They paid up, and hackers took off.

A staggering 92% of companies that pay the ransom do not get all of their data back, even with a decryption key, according to research by Sophos Cybersecurity. That’s what happened to an undisclosed company in 2021 after being hit by ransomware. A ransomware group known as BlackMatter used a phishing email to deceive a single employee at the company and then fully infiltrated the company’s systems, installing hacking tools across the network. In addition to locking up the company’s sensitive data, attackers threatened to release it publicly if the company didn’t pay up. The company gave in to the demands and paid the ransom – but it didn’t matter. Attackers leaked the data anyway, and the company was forced to restore some of its data from backups.

Reason #2: When You Pay the Ransom, It Only Encourages the Criminals to Launch More Attacks

When you pay a hacker a ransom during a ransomware attack, it just funds their operations and encourages them to continue their criminal actions and behaviors on other companies. You are basically just funding cyber terrorism when you give in to their demands.

Hacking groups can take that money to develop even more advanced methods of using malware to infiltrate vulnerable businesses of all sizes. So by paying the ransom, you only make ransomware worse.

On the flipside, the more obstacles that hackers face in their criminal activities, the chances of them being able to continue to hurt other companies goes down.

Case in point: ransomware is big business.

For sophisticated attackers, ransomware is a reliable way to (illicitly) generate revenue and avoid detection – precisely because so many companies pay the ransom, typically via untraceable crypto payments. Prior to 2020, there were 4 major ransomware groups that were responsible for the majority of attacks around the world. This number ballooned to more than 20 groups within the last 3 years. As of 2023, LockBit was the biggest ransomware group, responsible for an estimated 40% of all attacks. The group rakes in an estimated $91 million in ransom payouts a year from U.S. victims alone, according to figures from Bitdefender.

Reason #3: Your Company Might Be Sanctioned When They Pay the Ransom

As cyberattacks ramped up during the COVID-19 pandemic, the U.S. Treasury issued a statement that warned of the risk of sanctions for paying out ransoms to hackers. In essence, the new guidance made the act of paying the ransom illegal, in theory.

Keep in mind that the people behind ransomware aren’t just individual hackers launching attacks from their basements or coffeeshops around the world. In many cases, they’re foreign nation-states, terrorist groups or other adversaries of the United States. So by paying their ransom demands, you are effectively supporting those adversaries.

The legality of the whole situation is a bit unclear at the moment, but the last thing you want is a large monetary penalty to have to pay to the courts, on top of already paying out a big ransom to the cyber criminals.

Case in point: Feds are going after ransom facilitators, for now

According to some estimates, as much as 15% of ransomware payments involve a U.S.-sanctioned entity. However, the government doesn’t seem to be going after the victims who are forced pay these ransoms – at least not yet. Since the U.S. Treasury announced its threat of sanctions in 2020, we have not heard of any companies being slapped on the wrist for negotiating with their attackers, regardless of whether those attackers are connected with sanctioned groups. But the Feds are going after some facilitators of these payments. In 2021, the Office of Foreign Assets Control (OFAC) sanctioned Chatex, a Russian-operated virtual currency exchange, and a connected entity, Suex, for facilitating payments to ransomware groups. As part of this announcement, the government emphasized that all “companies are encouraged to report all ransomware incidents to law enforcement, as well as any payments with a potential sanctions nexus to OFAC.”

Reason #4: You’ll Be Targeted Again

When you pay the ransom, this puts another target on your back. By paying, you’re telling the hackers. “You win. Your attack worked. We’re willing to pay.” Naturally, this makes your business more likely to be the victim of a second attack.

Plus, if a second attack does occur, the odds are that the hackers will ask for a higher sum of money the next time. Look at it this way, if you feed birds at the beach, they are going to expect food and keep coming back to bother you again and again. You’ll never eat in peace at the beach because the birds expect people to feed them food. It’s a similar thing with hackers. If they know a company is going to pay up, they will continue to launch their attacks against them for the reward of additional ransom payments.

Finally, keep in mind it may not even be the same group to attack the company more than once. Hackers may sell information about the company to other groups. Or, the mere publicity of a successful attack can make the business a target with other hackers.

Case in point: 80% of companies are attacked a 2nd time

A 2022 study by Cybereason found that 80% of companies that paid a ransom were hit again at a later time. Among those, 40% paid up a second time, with 70% of those companies paying a higher amount than in the first attack. The UK’s National Cyber Security Centre recently alluded to one unnamed company that suffered such a repeat attack. The company paid their attackers nearly £6.5million (more than $8 million USD) and successfully received the decryption keys to restore their data. But oddly, they never filled the security gaps that led to the attack. Two weeks later, they were attacked again – by the same attacker – and were forced to pay up a second time.

Reason #5: The Hacker May Simply Increase the Demand

In a statement about previous attacks and the risks of paying the ransom, the FBI writes, “After paying the originally demanded ransom, some victims were asked to pay more to get the promised decryption key.”

When the hacker states the ransom payment they want, and you immediately pay it, what’s to stop them from simply upping the demand after that initial demand is met? There isn’t any guarantee that they will just want one simple payment.

It’s worth reiterating that you should not expect shady cybercriminals who disrupt your business to have any kind of moral compass. When you pay them, you are just falling into the hole of sending them more and more money, without getting your data back in return. The less you give in to them, the better.

Case in point: 1 in 3 victims are asked to pay more

Researchers at Proofpoint found that a third of ransomware victims that paid a ransom were forced to pay an additional ransom payment before receiving their decryption key. When Kansas Heart Hospital was infected with ransomware, disabling some of its most critical systems, administrators decided that the fastest way to recover was to pay the attackers. So they paid up. But the attackers did not release their data. Instead, they asked for more money. While ransomware hackers are sometimes willing to negotiate a lower payment with their victims, other attackers use the initial payment as bait. When companies pay up, it’s a sign that they have no other options, so the attackers ask for more before handing over the decryption key.

Reason #6: Your Cyber Insurance Rates Could Go Up

With the rise of ransomware over the past few years, businesses have begun seeking insurance policies that help to cover the costs of an attack, including ransom payments made to attackers. But once again, paying that ransom, even if it’s via an insurance company, can have consequences.

In addition to the risks outlined above, if you have cyber insurance that is used to pay the ransom demand for you, it’s likely that your insurance rates will go up. The insurance company is covering your business for what they call “cyber extortion” under the umbrella of a cyber liability policy. While it’s a smart move to have this type of insurance “just in case,” you should still think twice before you negotiate with your attackers at all.

Case in point: Premiums up by 50% in one year

For auto insurance, it’s well known that premiums can increase significantly after you have a car accident. The same is true for cyber insurance. One analysis found that 74% of victims that paid a ransom saw a rise in their premiums. But also, premiums can skyrocket even if you haven’t experienced an attack at all. Industry-wide, the costs of cyber insurance have been increasing by as much as 50% per year, due to rising ransomware demands across the globe. Additionally, keep in mind that ransom payments account for as little as 15% of the overall cost of a ransomware attack, according to some estimates. Operational disruptions and prolonged recoveries can be staggeringly expensive. As ransomware continues to wreak havoc on businesses, the costs to insure against these attacks will only continue to increase.

When You Have No Choice But to Pay

We understand that there are some cases where a company feels it has no other option but to go ahead and pay the ransom to the attacker. And the FBI also delicately acknowledges that the question of “whether to pay a ransom is a serious decision, requiring the evaluation of all options to protect shareholders, employees, and customers.”

If, for example, a company has no other way to operate with time-sensitive business functioning, it might be in its best interest to take the gamble of paying the ransom. This is especially true for healthcare organizations, whose operations can literally mean the difference between life and death. Such organizations need their data back to function correctly or they run the risk of shutting down permanently.

In these circumstances, you can see why companies may be willing to pay the ransom, even if there’s no guarantee.

But still, this is typically an absolute last resort. And with the right data backup systems in place, businesses may never have to face that decision in the first place.

Make Sure Your Company has a Comprehensive Data Backup Plan

One of the reasons most companies pay the ransom is that they don’t have reliable data backups that can be restored fast enough (if at all).

When the hackers infiltrate your company with ransomware, that important data might be gone forever if you don’t have data backups.

Data backups can restore the data back to a clean slate after a malicious attack. By rolling back to a recovery point from before the infection occurred, you restore your data back to normal and also remove the infection itself. This also eliminates the question of having to pay the ransom.

The type of data backup system you deploy is important. The Datto SIRIS is an all-in-one business continuity and disaster solution that provides dependable protection against ransomware and other data-loss events. In addition to providing fast backups and numerous restore methods, accessible both locally and in the cloud, the Datto SIRIS has built-in ransomware protection to detect early signs of an infection.

By being able to rapidly restore data from backups, you effectively stop an attack in its tracks and never have to face the difficult decision of paying your attackers.

Frequently Asked Questions (FAQ)

1) Does paying the ransom for ransomware work?

In a ransomware attack, paying the ransom does not guarantee that attackers will provide the decryption key. Even with the key, most organizations are unable to recover all their data with decryption alone. In one study, as much as 92% of companies failed to restore all their data even after paying the ransom.

2) What is the current average ransomware payout?

As of 2023, the average ransomware payout exceeded $1.5 million, according to a survey of 3,000 senior IT and cybersecurity professionals. More than 25% of the companies that paid a ransom were forced to pay between $1 million to $5 million.

3) How many ransomware victims pay the ransom?

About 41% of ransomware victims decide to pay the ransom, according to data from Coveware. This figure dropped from 50% the year prior, signifying that more businesses are implementing stronger disaster recovery solutions that remove the risk of paying the ransom.

Conclusion

Deciding whether to pay the ransom in a ransomware attack can be difficult for a business, especially when there are few other viable options. As a rule of thumb, companies should not pay the ransom unless they have exhausted all other options. Instead, businesses are encouraged to implement aggressive preventative measures, as well as robust data backup systems that can rapidly restore systems and eliminate the need to negotiate with attackers at all.

Get a Free Demo

Learn more about protecting your organization from a ransomware attack with BC/DR solutions from Datto. Request a free demo or speak to our business continuity experts at Invenio IT today. Call (646) 395-1170 or email success@invenioIT.com.

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