Passwords stored in plain text after Lion update
Legacy FileVault users (those who used FileVault before Lion) running a recently updated version of Mac OS X Lion should consider changing their login passwords. According to a report in ZDNet, an Apple programmer inadvertently left a debug flag in the latest 10.7.3 version of Mac OS X that turns on a system-wide debug log file. This log file stores the user's login passwords in plain text and is located in an unencrypted area.
Any user with admin or root access can read this file, grab the login credentials and access your encrypted data. If you use Time Machine to backup your system, this log file is also available from your archive.
This glitch affects users who enabled FileVault encryption, upgraded to Lion and kept folders encrypted using FileVault. FileVault 2 users are not affected by this bug. This glitch was first noticed by an Apple Support Community member who posted about the plain text passwords back in February.
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