> Anybody sending you back your password in clear text is also storing it that way in their database Incredibly ignorant statement. If it's encrypted in a reversible format then it's not cleartext. If it's being sent in a confirmation email, then it could even be stored as a one-way hash: password extracted from the form, inserted into email, hashed and stored (This is what WordPress, for example, does). A case can b…
If the app can "reverse" the encryption, so can an attacker. The case against storing passwords this way is pretty strong.
It's not foolproof, but for stupid free websites (that's what we're talking about right?), storing encrypted passwords isn't an automatic gimme for the attacker.