I'd worry more about users transmitting their passwords in the clear by using FTP. But I dunno many hosts that prohibit the use of FTP, which would solve that problem.
Just use SFTP and SSH to manage your hosting. It's really the most secure way and by doing so, your security is actually superior to most web hosts.
Actually, DreamHost is one of the few shared hosts that gives you SSH and SFTP access, so in that way their security is actually superior for those who take advantage of it.
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