Yahoo to pay $50M, other costs for massive security breach

SThe 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.

The free credit monitoring service from AllClear could end up being the most valuable part of the settlement for most accountholders. The lawyers representing the accountholders pegged the retail value of AllClear’s credit-monitoring service at $14.95 per month, or about $359 for two years — but it’s unlikely Yahoo will pay that rate. The settlement didn’t disclose how much Yahoo had agreed to pay AllClear for covering affected accountholders. The lawyers for Yahoo’s accountholders praised the settlement as a positive outcome, given the uncertainty of what might have happened had the case headed to trial.

Estimates of damages caused by security breaches vary widely, with experts asserting the value of personal information held in email accounts can range from $1 to $8 per account. Those figures suggest Yahoo could have faced a bill of more than $1 billion had it lost the case.

But Yahoo had disputed those damages estimates and noted many of its accountholders submitted false information about their birthdates, names and other parts of their lives when they set up their email.

The lawyers representing Yahoo accountholders have a big incentive to get the settlement approved. Yahoo will pay them up to $37.5 million in fees and expenses if it goes through.