In August of last year, a security researcher at UC Berkeley found two security vulnerabilities in LastPass while researching the security of web based password managers. He reported the problems to LastPass, who quickly remediated them.
One of the vulnerabilities would have allowed an attacker to gain access to unencrypted credentials IF the user accessed a malicious web site and then used the LastPass “BookMarklet” to log into that site - if you use the browser extensions for Chrome, IE, Firefox, or Safari (as 99% of LastPass users do), your account was not vulnerable to this attack. BookMarklets are only used if the browser in use does not support LastPass directly.
The other vulnerability would have allowed an attacker who knew a user’s log in ID to retrieve an user’s encrypted password file, but not the key needed to decrypt this file.
LastPass states that they have no evidence that either of these vulnerabilities were exploited by anyone other than the researchers.
I still use and recommend LastPass – after all, if we stopped using software every time a security vulnerability was found and fixed, we would not be using Windows, Mac OS, or any browsers and plugins. The extra security provided by using LastPass to manage unique strong passwords for the sites you log into far outweighs the risk of being compromised by vulnerabilities such as the ones described.
There is a lesson to be learned for LastPass users, though. The security of your account is as only as good as the master password you choose for your LastPass account. Make sure that it is hard to guess, and is constructed using letters, numbers and special characters in order to make it as hard as possible for someone to crack.
I am disappointed in how long it took LastPass to reveal this issue – when you are entrusted with users’ “keys to the kingdom,” you have a responsibility to be transparent about issues like this in a timely fashion. I think that this is also a good time for LastPass to open up their code for third party security review to be proactive about finding and fixing security issues before the bad guys do.