Why does owasp recommend using case insensitive logins ?
Make sure your usernames/user IDs are case-insensitive. User 'smith' and user 'Smith' should be the same user.
What's the security aspect of it?
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I can see two main aspects:
Users with mobile keyboards with auto-capitalization enabled will not have to change the first letter to lower case before submitting the form, and that leads to a better user experience.
Makes impersonation harder
If Smith and smith are seem as different users, and you allow users to communicate with each other, someone can create "clones" of the current accounts and mislead other users.
Many users use Windows and in Windows, the most names are not case sensitive. So if you want a nice user experience you should avoid case sensitive names.
But Unix systems have used case sensitive names for 50 years with no problem at all, because their users had to know that
SMITH are 3 different names, either for files or for users.
If the names are given by an administrator, it does not matter whether they are or not case sensitive: no sane administrator would give
smith to John Smith and
Smith to Bob Evil. But when you have a system in which users can register automatically, it can be important to prevent Bob Evil to create a
Smith account. If you don't, you would fail your professional duty of good practices and help Bob to impersonate John.