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Sharing Passwords Can Now Be a Federal Crime, Appeals Court Rules

Jul 10, 2016

On July 5, the U.S. Ninth Circuit Court of Appeals issued an opinion that found, in part, that sharing passwords can be grounds for prosecution under the Computer Fraud and Abuse Act (CFAA). The decision, according to a dissenting opinion on the case, risks making millions of people who share passwords into “unwitting federal criminals.”

The decision came in the case of David Nosal, an employee at the executive search (or headhunter) firm Korn/Ferry International. Nosal left the firm in 2004 after being denied a promotion. Though he stayed on for a year as a contractor, he was simultaneously preparing to launch a competing search firm, along with several co-conspirators. Though all of their computer access was revoked, they continued to access a Korn/Ferry candidate database, known as Searcher, using the login credentials of Nosal’s former assistant, who was still with the firm.

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Nosal was eventually charged with conspiracy, theft of trade secrets, and three computer fraud counts, and was sentenced to prison time, probation, and nearly $900,000 in restitution and fines.

Nosal's conviction under CFAA hinged on a clause that criminalizes anyone who “knowingly and with intent to defraud, accesses a protected computer without authorization.” Though CFAA is often understood to be an anti-hacking law, that clause in particular has been applied to many cases that fall far short of actual systems tampering.

CFAA has, for instance, been used to prosecute violation of Terms of Service agreements (which are themselves a contested practice). Most notoriously, the law was used to pursue Aaron Swartz, the young programmer who committed suicide after being charged with mass-downloading research papers from an MIT database, in violation of its terms of service—despite the fact that he was then a research fellow at MIT, with authorized access to the involved database.

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Because of cases like this, The New Yorker’s Tim Wu has described the CFAA as "the worst law in technology."

One of the Ninth Circuit judges, Stephen Reinhardt, seemed to agree with those interpretations in his dissenting opinion. While Reinhardt took no issue with Nosal’s convictions on trade secrets violations, he said the new decision also makes "consensual password sharing" a prosecutable offense. Reinhardt noted that the decision “loses sight of the anti-hacking purpose of the CFAA, and . . . threatens to criminalize all sorts of innocuous conduct engaged in daily by ordinary citizens.”

The dissenting judge cites the example of a husband sharing his banking password with his wife. The law could theoretically ensnare people who share their Netflix or HBO Go password, though it is basically inconceivable that the federal government would prosecute such an action.

Editor note, July 12, 2016 (2 pm): An earlier version of this article misrepresented the likely consequences of sharing passwords. The story and its headline have been updated.

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