I'm still a little unsure of how you are able to know some users had their password compromised. Is it a simple case of finding successful log in attempts from the same IP address as attack?

This is how we define "compromised" - people which had their passwords hash with old algorithm, which is relatively easy to crack.

If so, I feel you have an obligation to alert ALL of your users.

    scrypt(hmac_sha1(password, salt), salt, cpumemargs)

is it true that all, or greater than 1% of, emails and hashes were dumped?

I find it hard to believe you migrated 99% of passwords to a new scheme. I've never seen over 60%, and that is with a lot of prompting to users (and as as Scribd user i've never been prompted)

Alternatively, stored passwords can be upgraded by using the new scheme on the hold ashed password, and storing that that's how the password should be checked in the future.

Since not everyone was migrated, I'm assuming they went the first way.

You could say that this has a bearing on whether you continue to use the service, but if that were the case, wouldn't it be better to suggest that all services provide this information up front?

The decision to remain in a relationship is rarely a singular event (related to a singular experience). You could think of it more as the cumulative result of all relationship experiences. Even the best relationships involve some negative experiences, but the important part is making sure those negative experiences are mitigated as best as possible. Customers will give more leeway to vendors with whom they have a strong NET positive relationship.

There are two important technical points that could have been included to great effect:

1) That they store the encryption scheme with the password record so that they can upgrade their crypto incrementally.

2) That their most recent auth algorithm uses scrypt.

So how do these two points directly impact the mitigation of what is otherwise a negative experience? First up we should look at users who will understand what points 1 & 2 mean. These users will respond positively to these items, because it changes the conversation from "Scribd just got h4x'd" to "Hey, at least they had good crypto in place."

The next tier of users will come along, read these comments, and feel more confident that the community of knowledgable people around them are feeling OK about this, so they should too.

As to the question of, "wouldn't it be better to suggest that all services provide this information up front?" I would say yes, it would. This action is not mutually exclusive of including technical details in this communication though.

For one, I'm much less annoyed/pissed off at them now that I know they use scrypt. I'm not about to cancel my account and never use them again. And I'm not freaking out about whether my email and password have been added to a botnet cracking script running against every other website out there.

I've gotten so accustomed to hearing of companies using MD5 + salt and thinking that's secure, that is a pleasant surprise to find one using bcrypt, and downright mindblowing to find one using scrypt. Yes, my expectations are low.

>wouldn't it be better to suggest that all services provide this information up front?

Yes, absolutely.

> [...] but small amount of account records have had passwords encrypted with outdated algorithm (basically SHA1 + salt), so we preemptively reset their passwords and sent out emails to all affected users.

> This is how we define "compromised" - people which had their passwords hash with old algorithm, which is relatively easy to crack.

I came up positive on the check, which does make sense since i signed up a long time ago and don't often/ever sign in generally, so they wouldn't have had the opportunity to upgrade my hash after moving to better schemes.

Happily it was a 1-tiem/throwaway password though, but bit scary that it's the first list (that I'm aware of) I'm actually on.

[1] https://news.ycombinator.com/item?id=5493536

[2] http://www.scribd.com/password/check

GP is right; if owners of the leaked accounts [email, hash] pairs are reusing passwords, the leaked hashes are potentially useful even though scribd has reset them. They're simply not useful for logging in to scribd.