Yahoo will pay $50 million in damages and provide two years free credit monitoring to the 200 million Yahoo users affected by the service’s 2013 and 2014 security breaches, which were not revealed until 2016.
The restitution hinges on federal court approval of a settlement filed late Monday in a 2-year-old lawsuit seeking to hold Yahoo accountable for digital burglaries that occurred in 2013 and 2014, but weren’t disclosed until 2016.
It adds to the financial fallout from a security lapse that provided a mortifying end to Yahoo’s existence as an independent company and former CEO Marissa Mayer’s six-year reign.
Yahoo waited to reveal the security breaches until it had made a $4.83 billion deal to sell its digital services to Verizon Communications. Once the breaches were revealed, Yahoo had to knock $350 million off the price of the deal.
Verizon will cough up half of the settlement, while the other half of the settlement will be covered by Altaba Inc., a company that was set up to hold Yahoo’s investments in Asian companies and other assets after the sale. Altaba has already paid a $35 million fine to the Securities and Exchange Commission over Yahoo’s delay in disclosing the security breach to investors.
Approximately 3 billion Yahoo accounts were affected by hackers, some linked to Russia by the FBI. The settlement cover around 1 billion of those accounts, which were held by around 200 million folks in the U.S. and Israel.
Claims for a portion of the $50 million fund can be submitted by any eligible Yahoo accountholder who suffered losses resulting from the security breach. The costs can include such things as identity theft, delayed tax refunds or other problems linked to having had personal information pilfered during the Yahoo break-ins.
The fund will compensate Yahoo accountholders at a rate of $25 per hour for time spent dealing with issues triggered by the security breach, according to the preliminary settlement. Those with documented losses can ask for up to 15 hours of lost time, or $375. Those who can’t document losses can file claims seeking up to five hours, or $125, for their time spent dealing with the breach.
Yahoo accountholders who paid $20 to $50 annually for a premium email account will be eligible for a 25 percent refund.
AllClear will provide the free credit monitoring service. The firm’s credit-monitoring service usually run $14.95 per month.