Edit: My summary of that saga, posted at the time: http://www.blahedo.org/blog/archives/000836.html
I've found that a one-line response (i.e. no explaining why, no technical details, no explanations of explanations) generally works a lot better:
"Wouldn't this mean that everybody now has easy to guess passwords?"
Facebook: https://www.facebook.com/whitehat/bounty/ (disclaimer: I work here).
Tarsnap: http://www.tarsnap.com/bugbounty.html
Mozilla: http://www.mozilla.org/security/bug-bounty.html
Chromium: http://blog.chromium.org/2010/01/encouraging-more-chromium-s...
I will grant you tarsnap is pretty safe since it is a one man operation and Mozilla and Chromium are both depending on the goodwill of the community, but Facebook is company which has been pretty aggressive in the way it shits over its users (I can remember about 3 or 4 privacy debacles).
Do you feel like Facebook has ever "shit over" legitimate security researchers? I can see if I can help if you have examples.
Edit: though I do believe that reporting systems with bounties like those you linked are exactly the way to compete with the black market for vulnerabilities.
He could have pointed out the security flaw without downloaded peoples details.
Admittedly the reaction was over the top. But sending hundreds of peoples personal data around to 'prove' there is a security problem is a bit irresponsible.
The sad truth is, you can only make these companies move by hurting them. Another sad truth is that the best (and more often than not the only) way to hurt these companies is to hurt their customers.