Will US traders shake off the CDK attack by Independence Day?

It’s almost the 4th of July, and the peak season for summer vacation travel is soon approaching.

But despite sunshine and blue skies, Americans looking to purchase a new car for their summer road trips may have to prepare for much cloudier weather.

A full week after the first cyberattack that brought the CDK Global software-as-a-service platform for car dealerships to a standstill, the software provider informed its dealership customers on Tuesday (June 25) that its systems will remain down for at least the rest of the month.

This means that buyers looking to purchase a new car will have to bring cash or a check. And dealers will have to get out pen and paper.

Without CDK’s software, the more than 15,000 affected U.S. dealers will be unable to conduct credit checks, issue auto loans, enter into sales contracts, track inventory, or handle other important sales processes digitally – significantly slowing down the process of leasing or purchasing a car.

“This could result in significant loss of business and potentially a loss of trust in CDK within the merchant community,” Diana Lee, CEO and co-founder of Constellation, told PYMNTS.

For at least the next week and likely into July, CDK’s dealer customers will have to complete most tasks manually, using traditional paper-based methods. For example, each potential car buyer will have to register their vehicle with a local Department of Motor Vehicles (DMV) rather than having most of the administrative and legal work surrounding the car purchase done automatically.

CDK Global did not immediately respond to PYMNTS’ request for comment, and this is a developing story.

Read more: Cyberattack on software provider paralyzes US auto dealership sector

Global cyberattack on CDK underscores need for breach recovery

CDK called the cyberattack that crashed its systems and paralyzed over ten thousand U.S. dealerships a “ransomware operation.” The ongoing impact of the attack has underscored that nearly every function in the automotive industry cannot be performed without a dealer management system. After all, Software as a Service means that without available software, the services are also unavailable.

According to a report by CBS on Tuesday (June 25), CDK is continuing the “recovery process” of its “core applications and is making progress in restoring the functionality of its systems after they were crippled by several cyberattacks by a group suspected to be based in Eastern Europe.

As PYMNTS previously wrote, to mitigate the risk of cyberattacks, organizations must develop a robust cybersecurity framework that not only includes the latest technological defenses but also places a strong emphasis on human factors. Regular training programs, rigorous security protocols, and a culture of vigilance among employees can improve a company’s ability to defend against cyber threats.

Earlier this year (February 26), the National Institute of Standards and Technology (NIST) released its Cybersecurity Framework (CSF) 2.0: Small Business Quick-Start Guide, which outlines five key pillars that organizations should follow when managing cybersecurity risks.

These are: Identify, Protect, Detect, Respond and Recover. Supporting these five pillars is a central core of effective cyber governance.

“On the positive side, this outage could raise awareness within the automotive industry about the importance of better cybersecurity measures to protect data. This could be a wake-up call for dealers and industry leaders to rethink their cybersecurity practices and invest in stronger protection against disruptions, which could lead to improved data security standards across the industry,” said Constellation’s Lee.

Read more: Scaling effective cyber hygiene across the enterprise

Using corporate security for business growth

The FBI’s latest annual cybercrime report, released this spring, showed that financial losses in the U.S. from ransomware attacks increased by 74% in 2023.

And so far, this year has been a summer of cyberattacks and data thefts. The most recent attack occurred just on Tuesday (June 25), when the release of stolen data allegedly belonging to Evolve Bank and Trust, the US financial institution and banking partner of the collapsed FinTech Synapse, was reported.

To reduce the risk of future cyberattacks, it is critical that companies find out how the current attacks occurred – whether through social engineering, unpatched software or firmware, or other vulnerabilities.

“Debriefing reports help you understand what your business continuity plan was and where it failed… If you didn’t maintain your hygiene, that’s going to show up in the report. That’s why it’s so important to conduct red team exercises or simulated events,” Matanda Doss, executive director and senior information security manager for commercial banking at JPMorgan, told PYMNTS in December.