German company gets penalty because of saving passwords in plain text

Nov

25

2018

German provider of a social media service was fined 20,000 euros because, after a data leak, it appeared that the passwords had been stored unencrypted.

On September 8, the company contacted the LfDI, the Landesbeauftragte für den Datenschutz und die Informationsfreiheit Baden-Württemberg, to report a data breach. In an attack in July, the personal data of 330,000 users were stolen, including passwords and e-mail addresses. According to Der Spiegel, it concerns the chat platform Knuddels and 808,000 email addresses and 1.8 million usernames were stolen. In total, Knuddels would have 1.2 million unique users.

After Knuddels handed over the details of the hack and its infrastructure, the data protection authority LfDI found that the platform had stored the passwords of its users in clear text, ie unencrypted. The company would use the passwords in plain text for a ‘password filter ‘ that would prevent them from falling into the hands of unauthorized people, writes the LfDI .

By storing the passwords unsafe, according to the authority, the company violated article 32, paragraph 1 of the AVG , which states that data processors must take appropriate technical measures to ‘guarantee a risk-adapted level of security’, including via pseudonymization and encryption personal data. In the meantime, the service would have taken measures to put its IT security infrastructure in order. In determining the amount of the fine, the total costs for the company were taken into account, which would cover an unspecified amount of six figures.

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