My company recently discovered that we\'re logging invalid login attempts, along

Question

My company recently discovered that we're logging invalid login attempts, alongside with usernames and passwords. Those logfiles are stored on several machines and accessible to all team members. This was of course not our intention (introduced by previous team) and we already patched it.

What are the threats posed by this situation? Should we notify users about that or just remove entries from logs and move on (those were invalid passwords after all)?

Bonus question: How can I convince decision-makers to make the right choice?

Explanation / Answer

The threats is that if anybody of the team members is crooked he/she could guess the correct password. Invalid login attempts - it seems to me - are because of 3 reasons:

1. spelling mistakes for password or user name
2. wrong password or username
3. invalid attempts (hitting enter too early, no password at all etc)

Now for the spelling mistake it is very possible that it is easy to guess the password. If the wrong password is used then it may be the password for a different service. So the obvious threat is that anybody that has had access to the logfiles may abuse this information and impersonate somebody.

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