B2B Payments

New Orleans Hack Causes Vendor Payment Delays

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The computer system at New Orleans City Hall is still on the fritz following a cyberattack on Dec. 13 that has stalled vendor payments. It will cost more than $7.2 million and take as long as eight more months to repair, according to reports last Wednesday (Jan. 15).

Government services are lagging behind due to non-functioning email, causing payment problems. As a result, New Orleans Mayor LaToya Cantrell said she extended the deadline for tax payments until Feb. 14. Payments to city vendors have been delayed because employees could not get into the software to approve and process invoices. Cantrell has referred to the backlog as "a war room," and said they "eyeball each check" that goes out to a vendor.

Though the city’s bill payment system is back up, vendor payment delays will continue until the backlog is cleared, officials said. Cantrell said last week that the task at hand is updating the network with the work employees had to do by hand and on paper. Email is still not working for 75 percent of city hall employees, and all email prior to the hack is not accessible. 

"We are not out of the woods," Cantrell told reporters last month after the attack, but everything is taking much longer than officials anticipated.

New Orleans police and court employees are now able to get into their computer systems, and court operations are anticipated to restart soon. The online system for business permits and licenses is anticipated to be available to the public by Jan. 27, officials said.

The ransomware attack on Dec. 13 was stopped by shuttering the entire computer system. Officials launched a forensic investigation, scrubbing more than 3,400 computers and replacing about 800 computers, costing about $1 million. Chief Administrative Officer Gilbert Montaño said the city also bought new data storage, and moved its email to the cloud.

Insurance will cover about $3 million in expenses from the cyberattack. However, Montaño said it will likely hit $27 million. The rest of the money will come from the city’s emergency fund.

"We do anticipate increasing the level of [computer] insurance for the city moving forward, upward of maybe $10 million," Cantrell said.

The city is adding more protections for the network, in addition to a dedicated cybersecurity team.

"This isn’t a matter of if this happens again; it’s when it happens again," Montaño said.

Louisiana was also hit by cyberattacks in July and November, including a ransomware attack. The attacks took down phone lines and encrypted data at government and school offices. Both times, Louisiana Governor John Bel Edwards was forced to declare a state of emergency.



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.