As more South Carolinians learned that hackers hold their tax return data, Gov. Nikki Haley admitted Tuesday that the state did not do enough to protect their sensitive financial information and accepted the resignation of the agency director in the middle of the controversy. “Could South Carolina have done a better job? Absolutely, or we would not be standing here,” said Haley, who had insisted in the first days after revealing the cyber attack that nothing could have prevented the breach. Hackers possess Social Security and other data belonging to 5.7 million people – 3.8 million taxpayers and their 1.9 million dependents, Haley said. The number of businesses affected has risen slightly to nearly 700,000. All of the stolen tax data dating back to 1998 was unencrypted.
The theft at the S.C. Department of Revenue is the largest known hacking at a state agency nationwide, according to the San Diego-based Privacy Rights Clearinghouse, which has been collecting breach data since 2005.
Hackers took tax information only of people who filed returns electronically, Haley said. Taxpayers whose information was stolen will receive notification soon by letter or email, she said.
Thieves also have bank account information belonging to 3.3 million S.C. taxpayers, Haley said. The S.C. Banking Association has asked banks to step up surveillance for fraudulent activity and share news of attempts to drain accounts, said Fred Green, the group’s president.
Hackers duped a revenue department employee to click on a link in an Aug. 13 email, according to a report from Mandiant, a Washington computer forensics firm hired by the state to investigate the incident. The link appeared to trigger a program to steal the employee’s username and password. The crooks uploaded files on Sept. 13 and 14 after accessing the system eight times and stealing passwords of three other employees during the previous month, Mandiant said. The hackers used a virtual backdoor on Oct. 17, a week after the Secret Service alerted the state about the breach.