Yes, that happened last week to my yahoo mail (ATT) account. On a fine morning, my first instant message from a friend warned me that my email account has been hacked and security compromised. That was followed by several calls and mail messages. The intruder was sending a fake email in my name about me being in distress in London and asking for financial help. Hundreds of my contacts got this mail. Most of them knew such spams and ignored it, but some got alarmed and called to check if everything was ok.
I immediately changed my password and the email was accessible, but to my horror, all the contacts and mail folders were gone! My inbox was empty with no messages. It was like starting from scratch. I tried to call Yahoo and AT&T repeatedly, one sending me to the other in a loop, with no clear answer to recovering my lost contacts and mail folders. AT&T has to rank as the worst in customer support and their outsourced help-desk folks must have the lowest IQ. All they can do is to help you change your password! When I asked Yahoo about recovering the folders and contacts from a backup copy, I was explained very carefully that such things evaporate from the server never to be found again! Are we in 2012 or what? For now, my respect for PC-based mail like Outlook has gone up.
For web-mails, another idea is to back up the folders and contacts into a cloud-storage product such as Dropbox, so that recovery is possible. I did recover my contacts from this MacBook’s address book (thank God, it was backed up there when I bought my new MacBook Air). Losing several folders with important mails feels like your home has been burglarized. The agony of changing passwords to many other financial accounts is daunting. Fraud prevention and identity protection have to be the new hot category.
I was also advised that Gmail may be lot safer in that respect and Yahoo mail seems to be frequently subject to hacker attacks. One positive outcome is that I am much more sensitive to security management and alternative backups.