Telecom NZ has conceded that some 22,500 users of its Yahoo! Xtra email customers have been hacked.
Users of the Yahoo! Xtra email service, operated by Yahoo! and open only to Telecom NZ subscribers, were targeted by hackers last weekend.
The service has attracted about 450,000 subscribers, of which five percent were affected.
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"Telecom, in conjunction with email provider Yahoo!, has identified that up to approximately five percent of Yahoo! Xtra email customer accounts have been sending malicious emails – most likely without the customer’s knowledge, after their email account was accessed," the telco said in a statement.
Some 50,000 subscribers have changed their passwords since accounts were compromised last weekend.
Yahoo! said attackers gained access to customer account email addresses but had "currently no evidence" that further information was compromised.
However, Telecom NZ is following up with customer reports that more data was accessed.
Yahoo! could lose its email outsourcing deal with the telco following the breach, according to a Telecom NZ spokesperson, who indicated the service may be pulled in-house.
Telecom NZ retail boss Chris Quin says Yahoo! "has given Telecom an assurance" that the spamming will stop if users change their passwords.
Hacked users won't have a choice however, as the telco kicks off a password refresh program. It will warn customers by email and phone, including 10,000 today.
“If customers are not able to personally change their password within around 24 hours of our notification, we have a contingency process in place which will require customers to change their password the next time they access their email account,” Quin said.
It urged any users who receive spam from contacts to send a new email to the victim asking them to change their passwords.
“We would like to thank the around 5000 affected customers who have changed their passwords in recent days. Yahoo! has assured us that malicious emails are no longer being sent from these accounts,” the telco said in a statement.