Despite repeated assurances that the major breach on its systems did not severely impact its customers, Capital One Financial Corp's share prices still fell as investors remained unconvinced. The breach on Capital One's data, which were stored on Amazon's cloud servers, affected 106 million of the company's customers.
As the company deals with the fallout of the massive data breach, it's stock prices plummeted by more than 5.9 percent this week. Capital One confirmed that the data of its customers, particularly those who had applied for credit cards in Canada and the United States, were compromised.
Capital One announced that it expects to spend between $100 million to $150 million this year to deal with the data breach. Fortunately, the bulk of the amount may be covered by its standing insurance policies. The added costs, as well as the company's tarnished reputation, have caused investors to be wary of the firm's future as the aftermath of the incident still remains unclear.
The bank is expected to face a plethora of legal and regulatory hurdles following the incident. This week, two class-action lawsuits have already been filed in federal courts. Meanwhile, state attorneys general from Connecticut and New York have announced plans to launch an investigation into the matter. Lawmakers have also publicly criticized the company and have called on the government to impose tougher privacy laws.
Capital One had stored its data in Amazon's cloud unit, called Amazon Web Services. A former Amazon employee, named Paige Thompson, was apparently able to access Capital One's data through a "misconfiguration" within the data structure. The hacker was arrested and charged with computer fraud in Seattle. She is scheduled to make her first court appearance this week.
Following the reports of the hack, Amazon immediately defended its services stating that the problem did not lie in its cloud units. Amazon clarified that the way it had stored the data was not compromised in any way. Capital One later admitted that the problem was apparently due to an error on its own data infrastructure, which was stored on Amazon's servers. Despite redeeming itself from the data breach, Amazon still lost some of its investor's confidence with share prices dropping by 0.7 percent on Tuesday.
The data breach has had widespread effects on the entire banking industry as a whole as concerns of similar breaches loom over other financial institutions. Major banks in the United States currently utilize third-party providers for their client-facing operations, which opens the question of the risks involved with having cloud-based vulnerabilities.
