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The backlash is growing against the infosec firm that claimed it had uncovered a Russia-based gang's stash of 1.2 billion nicked website passwords.

Hold Security claimed the gang was hoarding over a one billion unique stolen usernames and passwords, siphoned off from insecure websites vulnerable to SQL injection and other common hacker tricks.

The story made a huge splash on the eve of the Black Hat infosec conference, even though disclosed info from Hold Security was lacking in meaningful detail – much less proof or any details about the CyberVor (“vor” meaning “thief” in Russian) gang, still less anything about the sites they claim to have looted.

Alex Holden of Hold Security earned his spurs in the infosec world by discovering the recent Adobe megabreach, along with other collaborations with investigative reporter Brian Krebs, who is vouching for the authenticity of his latest research.

Even so, eyebrows were raised when it emerged that Hold Security was leveraging its claimed discovery of a mountain of stolen credentials to market a new breach notification service to companies. Firms would be alerted if their site had come under attack provided they paid $120 to sign up to the service.

But what has really ignited criticism is how Hold Security is dealing with consumers whose details may have been included in the stash of stolen credentials.

As we noted yesterday, Hold Security is inviting punters to sign up to its Consumer Hold Identity Protection Service (CHIPS), a subscription service that (initially at least) is free for the first 30 days.

The security consultancy wants punters to provide it with their email address. If this appears on Hold's database of stolen credentials, they will then be asked to “provide an encrypted version of your passwords to compare it to the ones in our database, so that we can let you know exactly which of your passwords have been compromised”.

The passwords are apparently hashed in the web browser.

Independent security experts, including top infosec man Graham Cluley, have slammed the approach as "utterly idiotic".

"For one thing, what if the computer the user is typing on has keylogging malware in the background – isn’t it going to be trivial for malicious hackers to scoop up the victim’s most sensitive passwords as they are entered on this web form? Or what about the possibility of bad guys creating phoney versions of this webpage, specifically with the intention of nabbing users’ passwords?"

Asking punters to enter passwords for one website into another is always a bad idea, according to Cluley, who said that services like Troy Hunt’s haveibeenpwned.com give users a means to find out if their email addresses have appeared in leaked databases without asking for passwords or even a fee.

‪haveibeenpwned‬ has access to 163m breached accounts. Yet Hunt is inclined to think Hold is on the level.

We asked Hold Security to comment on this criticism but have yet to hear back. We'll update this story as and when we hear more.

Cluley is far from alone in his view that asking consumers to hand over passwords to unrelated sites is ill-conceived. Professor Matthew Green, who specialises in computer science at Johns Hopkins University, took Krebs to task via Twitter for endorsing Hold's stance.

Canadian software developer Shawn Hooper added: "What's he trying to do.... prove that social engineering works?! You'd think this is the week of ‪#defcon‬... oh wait."

The whole incident is well on its way to meme status, with Dave Aitel, chief exec of Immunity, cracking jokes about the situation.

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