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California-based i3 Brands Sues Rackspace Over Security Breaches

Thu, 2nd February 2017, 18:47

It’s regular enough that some annoyed client of a hosting company writes a review threatening legal action or states ‘they should be in jail’, but it’s not so often that someone actually follows through with it. Rackspace touts its “fanatical” client support, but one California e-commerce firm begs to differ and has charged in a new lawsuit that it lost numerous customers after the San Antonio company failed to provide web-hosting services and security as promised.

I3 Brands has filed suit in Bexar County District Court accusing Rackspace of providing “inadequate and non-existent security,” causing customers, including two unidentified carmakers to desert the business. I3 Brands is seeking more than $1 million in damages for lost revenue, $700,000 plus in fees it paid to Rackspace, and unspecified punitive damages.

Rackspace is staying mum on the legal action saying that the company has not been served and therefore has no comment. Rackspace went private again in August of 2016 after accepting a $4.3 billion cash offer from private equity firm Apollo Global Management.

I3 Brands is a technology based corporation with a deep portfolio of entities specializing in software and data-driven solutions that has several automobile manufacturers and thousands of individual dealerships as clients and has been a Rackspace customer since 2008.

According to the suit, in May 2014 i3 Brands uncovered a security breach relating to its data and customer information on Rackspace servers. New security measures were slated to be implemented in September 2014 but i3 Brands discovered the “load balancers” — which distribute network traffic across different servers — were insufficient for the enhanced security measures.

I3 Brands says it was forced to enter into another deal with Rackspace to stabilize the thousands of websites i3 Brands hosts or manages. Last April, the suit adds, i3Brands uncovered a second security breach involving the Rackspace servers. I3 Brands said it learned that Rackspace had installed the the more expensive load balancer without the necessary security patches. After security upgrades were completed, i3 Brands said Rackspace’s servers would repeatedly crash.

“Numerous calls with Rackspace’s ‘experts’ proved fruitless” the suit alleges. The suit also claims that an outside contractor hired by i3 Brands determined Rackspace servers were “misconfigured”, and “Rackspace, however, had no solution, even though Rackspace had recommended and implemented the new security platform”.

I3 Brands also alleged in the suit that its customers were vulnerable to hacking and theft of data as a result of Rackspace failing to activate another security device. Ultimately, i3 Brands said, it was forced to switch to another web-hosting company. It had been paying Rackspace $35,000 a month.

Although a mute point, Hostjury out of curiosity ran a who-is on i3 brand domains for the ‘other’ hosting company.

Domain Name: I3BRANDS.COM is on a Microsoft server at Google (go figure)
Domain Name: PARTS.COM is also on a Microsoft server at Google.
Domain Name: partprotection.com.. well it's just on a server at Google.
Domain Name: trademotion.com is also on a server at Google.
Then there is Domain Name: frequentz.com which happens to be on RACKSPACE.COM Name Servers.

I3 Brands has sued Rackpace for breach of contract and negligence. None of the allegations have been proven in court.

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