The ransomware, a form of malware virus / worm, encrypts many of the files on an infected computer and makes them impossible to open.
After the ransom is paid to the hacker, the files will be decrypted. But can you really trust a hacker to do this, especially after he already has your money?
If you're running Windows 7, Windows Vista, or Windows XP, you may be vulnerable. Newer versions of Windows have already been patched.
While standalone computers can be infected, computers on a network with other computers can rapidly spread the worm.
Run Windows Update and install all available security updates. This might require one or more cycles of rebooting. Re-run Windows Update until no more updates appear.
The other thing you should do is learn how to avoid malware spread via email phishing attacks.
Luckily for you, I'm working on a book about online safety that addresses email phishing attacks (and other problems).
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Here are some things you can do right now to protect yourself:
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