An example of this is chargeback fraud on marketplaces. The way the fraud works is someone buys a bunch of credit card numbers off of the dark web due to some websites’ bad security practices and a data breach. The fraudster then ATOs a merchant account on some marketplace platform or makes a fake account, e.g. Doordash, Airbnb, Shopify, etc. The ATO is usually possible because some subset of the merchants of the platform use the same passwords on another website that has been compromised, again, some data set is sold on the deep web. The fraudster then either has to change the payout method of the marketplace merchant account, which they can usually do by ATOing an acquiring bank that they can access the funds in some way, again due to another external institution with tenuous security practices.
Finally the fraudster charges all the stolen credit cards and in most cases leaves the platform taking the liability. This results in the platform pushing up take rates against their merchant accounts, which almost always gets passed back to the consumers of the service (us) by increasing the prices of the service.
The problem with passwords is that we expose ourselves to everyone else’s negligence. You might handle passwords with all the best security practices to be known but you expose yourself and your users to every other system’s incompetence. It wasn’t until I saw this play out, that I understood passwords aren’t just a disservice to the negligent compromised user but really to the whole ecosystem of the internet that partakes in password authentication.
Yes, there is always a trade off in security and friction. This has always been true. But if we know passwords are faulty and essentially useless, why continue with such a bad practice? To reduce friction to a maximal extent? By that logic we might as well throw out the concept of security altogether. Why not just make it so a user only has to enter their email/username and nothing else? Let me know how that goes for you. I think webauthn is likely the sustainable, long term solution but we’ve got a ways to go before some of the inane thinking around password preservation dies out.