I can't think of a good way for a business that has an online interface and frequently handles phone calls from customers to validate that they're talking to the correct person. Asking for other personal information can be used by an attacker to compromise multiple accounts via social engineering: http://www.wired.com/2012/08/apple-amazon-mat-honan-hacking/
Pretty much all organizations that allow phone authentication seem to be at risk of engineering attacks. The only ones that manage it send you something verifiable they can ask about like a credit card, and people who really care like the government just send an actual human to your house.
The best guess I've seen is that they might be hashing, but also having people read passwords to customer service reps. That would justify caring about rude plaintext, but it's also a terrible system.
Bets on how long before those folks make the news for losing a hundred million unhashed passwords?