I was using nautilus which apparently uses file-roller internally. Marc was also kind enough to educate me that specifying the password on the cli will always make it show up in the task list and is not a valid test case. Changing back to file-roller package.
** Package changed: p7zip (Ubuntu) => file-roller (Ubuntu) -- You received this bug notification because you are a member of Desktop Packages, which is subscribed to file-roller in Ubuntu. https://bugs.launchpad.net/bugs/880473 Title: encryption password shown in the clear in task list Status in “file-roller” package in Ubuntu: Confirmed Bug description: 7z in lucid shows the encryption password in the clear in the task list (-p option). Verified for encrypting and decrypting. To manage notifications about this bug go to: https://bugs.launchpad.net/ubuntu/+source/file-roller/+bug/880473/+subscriptions -- Mailing list: https://launchpad.net/~desktop-packages Post to : [email protected] Unsubscribe : https://launchpad.net/~desktop-packages More help : https://help.launchpad.net/ListHelp

