Two massive data breaches undisclosed for some three years and affecting 3.5 billion users will cost Yahoo $50 million in settlement damages in the culmination of a two-year-long class action lawsuit and the humiliating end of Yahoo as an independent company.
Yahoo will also have to foot the bill for two years of credit-monitoring services for approximately 200 million users whose personal information was stolen in the breach, as well as up to $35 million in attorney fees.
The data breach that affected 3.5 billion users took place in 2013, while another breach affecting 500 million users took place the following year; however, Yahoo only disclosed the breaches in 2016.
The breach led to the theft of users’ personal information, including names, birthdays, email addresses, encrypted-but-crackable passwords and even security questions and answers.
It’s not a huge victory for affected users, who in the best case scenario can claim $375, and in the worst case, only $125, depending on documented losses related to the breach.
Half of the $50-million bill will be paid by Verizon, which acquired Yahoo’s internet services in 2017. The remainder will be paid by Altaba Inc., which is responsible for that part of Yahoo not acquired by Verizon in the deal. Related: MIT Invests $1 Billion In Artificial Intelligence
Yahoo’s failure to disclose the breaches until 2016 shaved $350 million off its price tag for Verizon after the two had already negotiated the sale for $4.83 billion. While the settlement this week is only $50 million, another $300 million was lost on Yahoo’s tainted reputation over the scandal and any other costs that might end up being associated with the breach-related damage control.
Also this week, Facebook has been fined $645,000 by the UK’s Information Commissioner’s Office over the Cambridge Analytica data breach that exploited the data of 87 million users, harvested for political purposes.
The paltry fine represents the maximum fine that the UK information watchdog can levy. Facebook lucked out here because the breach took place shortly before Europe enforced stricter privacy rules through the GDPR.
In slapping the fine on Facebook, Information Commission Elizabeth Denham said the social media giant “should have known better and it should have done better”.
In September, Facebook announced another breach, saying that hackers had stolen the private data of some 30 million users, exploiting bugs in the login system. This time around, they were quick to disclose, with the breach happening only a few days after being discovered internally.
According to the IBM-sponsored ‘2018 Cost of a Data Breach’ study conducted independently by Ponemon Institute, the global average cost of a data breach is up 6.4 percent over 2017, to $3.86 million.
“The average cost for each lost or stolen record containing sensitive and confidential information also increased by 4.8 percent year over year to $148,” the study said.
In the meantime, victims of data breaches are probably wondering whether enough is being done to both protect them and compensate them.
Speaking to Slate, Ashkan Soltani, former chief technologist for the Federal Trade Commission, said, “I definitely don’t think the industry has gone far enough in terms of finding ways to make people whole and mitigating the impact to someone else.”
That’s because state laws, federal laws and the courts that interpret those laws tend to let companies ride by too easily on breaches because they don’t yet view exposure of personal data as harmful in and of itself. And the burden of demonstrating harm is a tough one and largely only focused on concrete financial loss.
By Michael Scott for Safehaven.com
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