UPDATED 21:06 EDT / JANUARY 29 2019

SECURITY

Judge rejects proposed Yahoo data breach settlement

A judge has rejected a proposed settlement by Yahoo over its 2013 and 2014 data breaches, leaving parent company Verizon Communications Inc. in the soup once again.

In the largest hack ever recorded, 3 billion Yahoo accounts were compromised in August 2013. with data stolen including names, email addresses, telephone numbers, dates of birth, hashed passwords and, in some cases, encrypted or unencrypted security questions and answers. In a separate hack in 2014, 500 million accounts were compromised.

The hacks were disclosed only in 2016 when Yahoo was in the process of being acquired by Verizon, a deal finalized in 2017 with a $250 million discount on the original acquisition price thanks to the hacks.

The proposed settlement, which would have covered litigants in both the U.S. and Israel, was rejected by U.S. District Judge Lucy Koh Monday on the basis that she could not declare the settlement “fundamentally fair, adequate and reasonable,” according to Reuters. Yahoo was offering a $50 million total payout plus two years of free credit monitoring for about 200 million people.

Judge Koh took particular issue with the settlement failing to say how much victims could expect to recover and not disclosing the size of the settlement fund or the costs of the credit monitoring. The settlement is said to include $35 million to pay the fees for the plaintiffs’ lawyers, which the judge said may be “unreasonably high.”

Judge Koh also compared the settlement to that of healthcare provider Anthem Inc., who agreed to pay a $115 million settlement over a data breach that affecting 79 million customers in 2015. Anthem had also offered free credit monitoring before settling as well as upgrading its data security, something Yahoo did not do.

“Yahoo’s history of nondisclosure and lack of transparency related to the data breaches are egregious,” the judge wrote. “Unfortunately, the settlement agreement, proposed notice, motion for preliminary approval, and public and sealed supplemental filings continue this pattern of lack of transparency.”

In a statement, Verizon said it was “confident” there was a “viable path forward” despite the judge’s ruling.

The ruling comes as the Verizon Media Group, which includes Yahoo, has been struggling. Verizon announced a $4.6 billion writedown on the valuation of the group in December, and last week it announced that it was cutting 7 percent of staff, about 800 people, from the group to reign in costs.

Image: Pixbay

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