As I continue to build more and more websites and web applications I am often asked to store user's passwords in a way that they can be retrieved if/when the user has an issue (either to email a forgotten password link, walk them through over the phone, etc.) When I can I fight bitterly against this practice and I do a lot of ‘extra’ programming to make password resets and administrative assistance possible without storing their actual password.
When I can’t fight it (or can’t win) then I always encode the password in some way so that it, at least, isn’t stored as plaintext in the database—though I am aware that if my DB gets hacked it wouldn't take much for the culprit to crack the passwords, so that makes me uncomfortable.
In a perfect world folks would update passwords frequently and not duplicate them across many different sites—unfortunately I know MANY people that have the same work/home/email/bank password, and have even freely given it to me when they need assistance. I don’t want to be the one responsible for their financial demise if my DB security procedures fail for some reason.
Morally and ethically I feel responsible for protecting what can be, for some users, their livelihood even if they are treating it with much less respect.
I am certain that there are many avenues to approach and arguments to be made for salting hashes and different encoding options, but is there a single ‘best practice’ when you have to store them? In almost all cases I am using PHP and MySQL if that makes any difference in the way I should handle the specifics.
Additional Information for Bounty
I want to clarify that I know this is not something you want to have to do and that in most cases refusal to do so is best. I am, however, not looking for a lecture on the merits of taking this approach I am looking for the best steps to take if you do take this approach.
In a note below I made the point that websites geared largely toward the elderly, mentally challenged, or very young can become confusing for people when they are asked to perform a secure password recovery routine. Though we may find it simple and mundane in those cases some users need the extra assistance of either having a service tech help them into the system or having it emailed/displayed directly to them.
In such systems the attrition rate from these demographics could hobble the application if users were not given this level of access assistance, so please answer with such a setup in mind.
Thanks to Everyone
This has been a fun question with lots of debate and I have enjoyed it. In the end I selected an answer that both retains password security (I will not have to keep plain text or recoverable passwords), but also makes it possible for the user base I specified to log into a system without the major drawbacks I have found from normal password recovery.
As always there were about 5 answers that I would like to have marked as correct for different reasons, but I had to choose the best one–all the rest got a +1. Thanks everyone!
Also, thanks to everyone in the Stack community who voted for this question and/or marked it as a favorite. I take hitting 100 up votes as a compliment and hope that this discussion has helped someone else with the same concern that I had.
Best Answer
How about taking another approach or angle at this problem? Ask why the password is required to be in plaintext: if it's so that the user can retrieve the password, then strictly speaking you don't really need to retrieve the password they set (they don't remember what it is anyway), you need to be able to give them a password they can use.
Think about it: if the user needs to retrieve the password, it's because they've forgotten it. In which case a new password is just as good as the old one. But, one of the drawbacks of common password reset mechanisms used today is that the generated passwords produced in a reset operation are generally a bunch of random characters, so they're difficult for the user to simply type in correctly unless they copy-n-paste. That can be a problem for less savvy computer users.
One way around that problem is to provide auto-generated passwords that are more or less natural language text. While natural language strings might not have the entropy that a string of random characters of the same length has, there's nothing that says your auto-generated password needs to have only 8 (or 10 or 12) characters. Get a high-entropy auto-generated passphrase by stringing together several random words (leave a space between them, so they're still recognizable and typeable by anyone who can read). Six random words of varying length are probably easier to type correctly and with confidence than 10 random characters, and they can have a higher entropy as well. For example, the entropy of a 10 character password drawn randomly from uppercase, lowercase, digits and 10 punctuation symbols (for a total of 72 valid symbols) would have an entropy of 61.7 bits. Using a dictionary of 7776 words (as Diceware uses) which could be randomly selected for a six word passphrase, the passphrase would have an entropy of 77.4 bits. See the Diceware FAQ for more info.
a passphrase with about 77 bits of entropy: "admit prose flare table acute flair"
a password with about 74 bits of entropy: "K:&$R^tt~qkD"
I know I'd prefer typing the phrase, and with copy-n-paste, the phrase is no less easy to use that the password either, so no loss there. Of course if your website (or whatever the protected asset is) doesn't need 77 bits of entropy for an auto-generated passphrase, generate fewer words (which I'm sure your users would appreciate).
I understand the arguments that there are password protected assets that really don't have a high level of value, so the breach of a password might not be the end of the world. For example, I probably wouldn't care if 80% of the passwords I use on various websites was breached: all that could happen is a someone spamming or posting under my name for a while. That wouldn't be great, but it's not like they'd be breaking into my bank account. However, given the fact that many people use the same password for their web forum sites as they do for their bank accounts (and probably national security databases), I think it would be best to handle even those 'low-value' passwords as non-recoverable.