Yahoo is facing mounting criticism and legal action over its revelation that 500 million of its user accounts were compromised.
Yahoo says the security breach occurred in 2014 but only now is the company revealing the full extent of it.
The revelation comes two months after Verizon agreed to buy Yahoo’s internet business for almost $5 billion.
Although Verizon is yet to comment on the story, with the deal still going through, but at least one user is taking Yahoo to court.
As reported by Reuters, New York resident Ronald Schwartz is suing Yahoo on behalf of all Yahoo users in the US whose personal information was stolen.
The amount of money Schwartz is seeking and other details are yet to be disclosed, but Reuters says Schwartz is accusing Yahoo of demonstrating “reckless disregard for the security of its users’ personal information that it promised to protect”.
It’s being reported on NewsBTC.com that Yahoo only admitted the security breach after a hacker by the name of “Peace_of_mind” offered 200 million Yahoo user credentials on the darknet for a price.
Peace_of_mind is said to have previously been involved in hack attacks against MySpace and LinkedIn.
Yahoo CEO Marissa Mayer is reported by FT.com to have known about the hack in July of this year at least.
However, she is thought to have continued with the Verizon negotiations without adequately informing them of the potential security disaster.
Verizon says it only learned of the security breach earlier this week, at the same time as everyone else.
In a statement to the Securities and Exchange Commission of the US, Mayer assured the authorities that there were no security issues that could adversely affect the sale to Verizon.
However, in light of the revelations of the past week, tech industry observers are saying she and Yahoo may face some adverse consequences in that Verizon may want to knock down the price some more at least, maybe even pull out of the deal altogether.
Yahoo had struggled to find a buyer until Verizon came along. Despite being an internet pioneer and at one time the owner of the most popular search engine, the company lost its way, lots of users, and a lot of money.
Even so, Microsoft was willing to pay $45 billion to acquire Yahoo in 2008 but nothing came of it.
Now, even though the sale price for Yahoo’s internet business is one-tenth of the Microsoft offer, it’s looking like it could be a costly purchase for Verizon.