The Information Commissioner’s Office (ICO) has fined password manager provider LastPass UK Ltd £1.2 million following a 2022 data breach that compromised the personal information of up to 1.6 million people in the UK.
The data breach occurred in August 2022 and was the result of two isolated incidents that, when combined, enabled a hacker to gain unauthorized access to LastPass’ backup database. The stolen information included customer names, email addresses, phone numbers, and stored website URLs.
While the data breach exposed sensitive personal information, the ICO confirmed there is no evidence that hackers were able to decrypt customer passwords. This is due to LastPass’ use of a ‘zero knowledge’ encryption system, which ensures that master passwords and vaults are stored locally on customer devices and never shared with the company.
Incident One: Corporate Laptop Compromised
The first incident involved a LastPass employee’s corporate laptop based in Europe. A hacker gained access to the company’s development environment and obtained encrypted company credentials. Although no personal information was taken at this stage, the credentials could have provided access to the backup database if decrypted.
LastPass attempted to mitigate the hacker’s activity and believed the encryption keys remained safe, as they were stored outside the compromised environment in the vaults of four senior employees.
Incident Two: Personal Device Targeted
The second incident proved more damaging. The hacker targeted one of the senior employees who had access to the decryption keys. Exploiting a known vulnerability in a third‑party streaming service, the attacker gained access to the employee’s personal device.
A keylogger was installed, capturing the employee’s master password. Multi‑factor authentication was bypassed using a trusted device cookie. This allowed the hacker to access both the employee’s personal and business LastPass vaults, which were linked by a single master password.
From there, the hacker obtained the Amazon Web Service (AWS) access key and decryption key stored in the business vault. Combined with information taken the previous day, this enabled the extraction of the backup database containing customer personal information.
ICO’s Findings and Fine on LastPass UK
The ICO investigation concluded that LastPass failed to implement sufficiently strong technical and security measures, leaving customers exposed. Although the company’s zero knowledge encryption protected passwords, the exposure of personal data was deemed a serious failure.
John Edwards, UK Information Commissioner, stated: “Password managers are a safe and effective tool for businesses and the public to manage their numerous login details, and we continue to encourage their use. However, as is clear from this incident, businesses offering these services should ensure that system access and use is restricted to reduce risks of attack. LastPass customers had a right to expect their personal information would be kept safe and secure. The company fell short of this expectation, resulting in the proportionate fine announced today.”
Lessons for Businesses
The ICO has urged all UK businesses to review their systems and procedures to prevent similar risks. This case underscores the importance of restricting system access, strengthening cybersecurity measures, and ensuring that employees’ personal devices do not become weak points in corporate networks.
While password managers remain a recommended tool for managing login details, the incident shows that even trusted providers can fall short if internal safeguards are not sufficiently strong.
The £1.2 million fine against LastPass UK Ltd serves as a clear reminder that companies handling sensitive data must uphold the highest standards of security. Although customer passwords were protected by the company’s zero knowledge encryption system, the exposure of personal information has left millions vulnerable.
The ICO’s ruling reinforces the need for constant vigilance in the face of growing cyber threats. For both businesses and individuals, the message is straightforward: adopt strong security practices, conduct regular system reviews, and implement robust employee safeguards to reduce the risk of future data breaches.