I was on the receiving end of one of these experiences while I was in high school, in a rather unique way.
As I am blind I need to use a screen reader to know what's on the screen. Up until very recently, screen readers could not thell the difference between a standard edit box and a password edit box. This ment that even if the text in a password edit box was replaced with *s or something similar, the actual characters would still get read through the screen reader as you typed them in.
About two years ago, I was setting up a computer for another blind student at another school. Their system administrator was rather paranoid, and as a result was running Foolproof on all the computers. Rather then just telling me the Foolproof password, he had to come down everytime I needed it and type it in. And each time he typed it, it got echoed through the screen reader. Fortunately, I was wearing headphones so it didn't get yelled out to the whole room, but I heard it several times. Unfortunately, the password was digital, so it probably would have been cracked soon anyway.