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The profiles that were compromised had easily guessable passwords.The hacker did not at any time gain access to the loveandfriends database or webservers.
Providing the hacker stopped no further action would have been taken.
Despite this the hacker persisted in attempts to access profiles on the loveandfriends site and continued to make demands and threats.
Working with Scotland Yard's Computer Crime Unit loveandfriends was able to track the hacker and provide sufficient info to the police that led to the hacker being identified and subsequently arrested.
The hacker gained control of profiles by using an automatic dictionary attack (of 'likely' passwords) on random profiles.
I was pretty sure that he was not technically capable of doing this - him not having breached our main computer security - but this did cause our staff a deal of worry.
In hindsight my initial suspicion that he was using a relatively simple brute force dictionary attack on certain profiles was confirmed - so there was no real threat to our data.
However, although we 'only' directly lost about £200 in terms of lost business from the people whose profiles were compromised - it was the fear of attack and the substantial amount of time spent in tracking the hacker, making extra backups of data, adding more and more security, etc. We would much rather spend our time making loveandfriends better and better, with more features and better usability - rather than having to turn it into Fort Knox.
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Whilst not prepared to give in to demands, loveandfriends management attempted dialogue with the hacker and appealed to the hacker's better nature to stop.