Yahoo says all 3 billion accounts hacked in 2013 data theft

Yahoo said last December that data from more than one billion accounts was compromised in 2013

Yahoo said on Tuesday that all three billion of its accounts were hacked in a 2013 data theft, tripling its earlier estimate of the size of the largest breach in history, in a disclosure that attorneys said sharply increased the legal exposure of its new owner, Verizon Communications Inc.

The news expands the likely number and claims of class action lawsuits by shareholders and Yahoo account holders, they said. Yahoo, the early face of the internet for many in the world, already faced at least 41 consumer class-action lawsuits in US federal and state courts, according to company securities filing in May.

John Yanchunis, a lawyer representing some of the affected Yahoo users, said a federal judge who allowed the case to go forward still had asked for more information to justify his clients' claims.

"I think we have those facts now," he said. "It's really mind-numbing when you think about it."

Yahoo said last December that data from more than one billion accounts was compromised in 2013, the largest of a series of thefts that forced Yahoo to cut the price of its assets in a sale to Verizon.

Yahoo said on Tuesday "recently obtained new intelligence" showed all user accounts had been affected. The company said the investigation indicated that the stolen information did not include passwords in clear text, payment card data, or bank account information.

But the information was protected with outdated, easy-to-crack encryption, according to academic experts. It also included security questions and backup email addresses, which could make it easier to break into other accounts held by the users.

Many Yahoo users have multiple accounts, so far fewer than three billion were affected, but the theft ranks as the largest to date, and a costly one for the internet pioneer.

Verizon in February lowered its original offer by $350 million for Yahoo assets in the wake of two massive cyber attacks at the internet company.

Some lawyers asked whether Verizon would look for a new opportunity to address the price.

"This is a bombshell," said Mark Molumphy, lead counsel in a shareholder derivative lawsuit against Yahoo's former leaders over disclosures about the hacks.

Verizon did not respond to a request for comment about any possible lawsuit over the deal.

Verizon, the likely main target of legal actions, also could be challenged as it launches a new brand, Oath, to link its Yahoo, AOL and Huffington Post internet properties.

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