I ran into this issue when I accidentally deleted my ~/.bashrc file. Changing the Profile Preferences as stated in a comment above did not work. Since I completely lost my ~/.bashrc file, I simply copied /etc/skel/.bashrc to ~/.bashrc. After a logout and login, my terminal colors were back to normal.

One could also look at /etc/skel/.bashrc to see if anything related to color is missing from their ~/.bashrc file.

This may not be the solution to OP's exact problem but I hope it helps somebody.