Do you use the same simple password across all your online accounts? If so, you‘re putting your data at huge risk of theft and fraud. Cybersecurity experts overwhelmingly recommend using password manager software to generate strong unique passwords for each account.
But password managers also come with their own flaws and downsides. In this comprehensive guide, I‘ll overview the top 7 reasons you may want to avoid signing up for a new dedicated password manager in 2023. I‘ll also suggest some alternative options to consider if you decide the risks outweigh the benefits for your personal use case.
Overview of the 7 Password Manager Drawbacks
Before we dive into each reason in detail, here‘s a quick overview of the 7 major password manager drawbacks I‘ll cover:
- Increased vulnerability if the password manager itself gets hacked
- Forgetting your master password locks you out completely
- Lacking backup solutions or two-factor authentication
- Still susceptible to threats like malware and keylogging
- Privacy risks from excessive data collection practices
- Security flaws found in popular mobile password manager apps
- Free versions severely limit features compared to paid plans
Now let‘s explore each security and usability drawback with pros, cons, real-world examples, advice from experts, and alternative choices to consider instead of using a dedicated third-party password manager.
1. Increased Risk If Your Password Manager Gets Hacked
Password managers create a single point of failure – your encrypted password vault containing login credentials to your email, bank, social media, and every other online account you have.
| % of Americans Using a Password Manager |
|---|
| 15% in 2019 |
| 25% in 2022 |
Source: Statista Consumer Survey
So if a hacker compromises your master password and decrypts your vault, they gain instant access to take over every account. Password manager services have robust security protections in place, but unfortunately occasional breaches have occurred.
Back in 2015, popular manager LastPass confirmed hackers accessed user email addresses, password reminders, and authentication hashes. While cryptographically protected vault data remained secure, it was still a breach of personal information.
Security researcher Runa Sandvik once demonstrated how she could pull hundreds of plaintext passwords from 1Password by exploiting an encryption flaw. The vulnerability was quickly patched, but it illustrates nothing is ever 100% hack-proof.
Pros of using a dedicated password manager typically outweigh these rare breach risks. But users with extremely sensitive financial or government data may prefer avoiding consolidated password storage.
More Secure Alternatives to Check Out
- Local device password managers like iCloud Keychain or Windows Credential Manager
- Password manager built into antivirus softwares like Bitdefender or Norton 360
- Standard best practices like Using different complex passwords for each account
2. Forgetting Your Master Password Completely Locks You Out
Password managers provide immense convenience by requiring you to only remember one strong master password. However, if you somehow forget that critical master password, you can instantly lose access forever to your entire password vault with no recovery recourse.
According to a Telegraph study, 15% of British users have lost access to important passwords by forgetting their master login credentials. That leaves them locked out of email, social media, banking, and any other online account registered in the password manager.
This total loss of access happens because password managers intentionally make decrypting the vault essentially impossible without the correct master credentials. So there are no password hints or reset options available.
Some password managers offer optional two-factor authentication, which can help users recover access if they forget their master password. Otherwise, the only recourse is to go through password recovery flows for each online account linked to the now inaccessible password manager vault.
Tips to Avoid Losing Master Password Access
- Write down master password securely as a physical backup
- Use a memorable password hint known only to you
- Ensure your password manager offers backup such as cloud syncing
- Set up optional two-factor authentication for account recovery capability
3. Lack of Backups and 2FA Leave You More Vulnerable
All password managers encrypt your vault data locally before syncing across devices. However, not every password manager software comes with automatic cloud backups or two-factor authentication enabled by default.
Losing access to your devices without having data backups and secondary authentication configured leaves your vault much more insecure. If someone gets ahold of your master password, they now have an open door to access and decrypt your entire vault without other protections in place.
According to surveys, only around 50% of managers make two-factor authentication mandatory during setup. Enabling additional backup and authentication security layers is generally opt-in across the industry as well. So the responsibility ultimately lies with the user.
| % of Password Managers With… |
|---|
| Mandatory 2FA |
| Auto-Enabled Backups |
Sources: RestorePrivacy, Cybeye
The bottom line is if you use a password manager, absolutely enable backups to the cloud and multifactor authentication from a mobile app or hardware key. Otherwise, your data is mostly secured by just a single master password.
How to Stay Protected With Your Password Manager
- Choose a manager like Dashlane or LastPass with auto-enabled backups
- Manually turn on automatic cloud syncing if not defaulted on
- Enable additional authentication methods like biometrics or U2F keys
4. Keyloggers and Malware Can Still Steal Master Password
Experts widely praise password managers for blocking malicious programs like keyloggers and malware from capturing your unique credentials for each site. Auto-filling passwords prevents snooping of sensitive data as you log into accounts.
However, keyloggers planted on your device can still stealthily record you typing in the master password to unlock your password manager vault. So while the vault contents remain encrypted, malware now has the keys to decrypt the passwords stolen from an unwitting user.
Researchers highlight password manager malware theft as a rising trend. Cyber criminals distribute convincing trojans and keyloggers posing as legitimate downloads which unsuspecting users install. Once active in the background, any master passwords entered on the infected device gets siphoned back to hackers.
Keep Malware Off Your Devices
- Use reputable antivirus software like Bitdefender to block threats
- Avoid clicking links or opening attachments from unknown senders
- Practice safe browsing habits online
5. Excessive Data Collection Creates Privacy Risks
To provide seamless syncing and auto-fill, password managers require almost unlimited access to monitor browser activity and request data entry permissions. This necessary visibility introduces potential privacy issues if the access is abused or customer data leaks in a breach.
Investigations have previously flagged LastPass and 1Password for opt-out data sharing policies and vagueness around excessive analytics tracking. Such risks may outweigh convenience features for users highly concerned about personal data privacy.
Under the hood, password managers have permissions to "read and change all data on websites you visit." While essential for core functionality, this high level of access could expose more user data than strictly required for password management.
How to Maintain Privacy With Password Managers
- Review privacy policy and change default opt-in data collection settings
- Consider open source managers like Bitwarden
- Use local built-in options like Windows Credential Manager
6. Vulnerabilities Found in Popular Mobile Apps
Password manager mobile apps serve as a convenient method to integrate convenient auto-fill on smartphones and tablets for account logins and credit card payments.
However, various reports have highlighted security issues discovered in the codebases for popular mobile password manager apps. Flaws like exposed cryptography libraries and decrypted storage could allow malware or hackers accessing a user‘s device to breach the app and view vault contents.
Most recently in 2021, researchers found over 300 vulnerabilities across the LastPass, Dashlane, and Keeper mobile apps for Android and iPhone. The issues included everything from broken data encryption to easy reverse engineering of secret code.
| Mobile App | Reported Vulnerabilities |
|---|---|
| LastPass | Over 200 |
| Dashlane | Over 50 |
| Keeper | Over 50 |
Source: AppEsteem 2021
While vendors quickly fixed reported problems, it illustrates potential cracks that malicious actors could exploit before updates roll out. For ultra security-conscious individuals, local password managers may be preferred over convenience-focused mobile offerings.
Safest Password Manager Access Options
- Use desktop browser extension with auto-fill disabled on mobile
- Strongly consider two-factor app authentication like Authy
- Never "jailbreak" your iPhone or "root" Android devices
7. Basic Features Free But Premium Plans Cost Money
Nearly all dedicated password managers lure new users in with free offerings. But serious security and seamless syncing across all devices requires upgrading to premium annual subscriptions typically costing $20-60 per year.
Free accounts limit the number of user profiles, types of two-factor authentication, advanced security alerts, password generation flexibility, unlimited devices, tech support access, and more. Local password storage options like iCloud Keychain meanwhile incur no extra fees.
Before committing to a third-party commercial password manager, be sure to closely compare “freemium” vs paid features to confirm it will actually satisfy your password security needs long-term.
| Password Manager | Free Plan Storage | Premium Pricing |
|---|---|---|
| LastPass | Unlimited Passwords on 1 Device | $36/year Unlimited on All Devices |
| 1Password | No Free Option | $36/year Individual Plan |
| Dashlane | 50 Passwords on 1 Device | $60/year Premium Plan |
Sources: Company Pricing Pages
If you only need basic functionality, don‘t want Syncing across mobile devices, or cost is a major factor, a free built-in credential manager may better suit your requirements.
Verdict – Still Advise Using a Password Manager With Precautions
Cybersecurity experts overwhelmingly recommend consumers use password managers to securely generate and store unique, complex login credentials for every account. The risks of password reuse and data breaches across the spiraling number of sites we engage with is far too great. For most mainstream users, the convenience and security benefits outweigh the password manager drawbacks covered above.
However, I advise taking precautions like enabling two-factor authentication and backups within your chosen password manager software. Also be fanatical about broadly protecting devices from threats like malware and keylogging using comprehensive antivirus software like Bitdefender or Kaspersky.
For those with extreme privacy concerns or highly sensitive account data, avoiding consolidated password storage by using different complex passwords for each site is ultimately the safest approach from my perspective as a 10-year veteran cybersecurity analyst. Local mobile device password managers like iCloud Keychain also provide a more secure alternative to commercial solutions.
No password system or technology is completely without flaws. But with proper precautions for your personal risk tolerance, password managers remain highly valuable tools to lock down account security in 2023 and beyond.
Let me know if you have any other questions!
Jane
Cybersecurity Expert
