Facebook has found itself in a situation that can best be called "lawful but awful."
The Wall Street Journal reports that the social behemoth admits it has been storing user passwords for internal use in a non-encrypted plain-text format.
The stored passwords included those for Facebook Lite, Facebook and Instagram users.
Facebook says the discovery of the password trove came during a security review in January.
Security researcher Brian Krebs said on his blog that the data was searchable by "by thousands of Facebook employees -- in some cases going back to 2012."
Facebook has said that there is no evidence of abuse of this information by employees.
The situation arose from employee-built applications that logged the unencrypted user password data and then stored it in plain text on internal company servers.
The number of users affected may be between 200 million and 600 million and the data searchable by more than 20,000 Facebook employees.
While Facebook may alert the users that are affected by this situation, no password resets for users are contemplated at this time.
Pedro Canahuati, VP Engineering, Security and Privacy, addressed the situation in a blog post. "To be clear," he said, "these passwords were never visible to anyone outside of Facebook and we have found no evidence to date that anyone internally abused or improperly accessed them. We estimate that we will notify hundreds of millions of Facebook Lite users, tens of millions of other Facebook users, and tens of thousands of Instagram users. Facebook Lite is a version of Facebook predominantly used by people in regions with lower connectivity."
The same post goes on to tout all the methods Facebook implements for password security.
But Facebook has recently come under fire for use of user phone numbers for multi-factor authentication while then using those same numbers for marketing purposes.
Adam Laub, SVP of product management at Stealthbits Technologies, thinks the problem is goes wider than Facebook.
In a statement to Security Now, he said that, "If everyone leveraged strong, unique passwords and changed them frequently, this type of news might not be treated quite the same. However, in all likelihood, whether these passwords were around for 10 minutes or 10 years, the username and password combinations would still be valid. If not on Facebook, then almost assuredly on some other site."
He went on to say that, "This is just another example of why password hygiene matters. If compromised, this dataset would have likely led to the identify theft of at a minimum thousands, if not many, many millions of people."
It's hard to argue against the idea that passwords do matter. But an event like this should be a spur to find other ways to authenticate a user's identity than an easily reproducible string of data.
— Larry Loeb has written for many of the last century's major "dead tree" computer magazines, having been, among other things, a consulting editor for BYTE magazine and senior editor for the launch of WebWeek.