Back in the day we called this "shoulder surfing" If someone is standing next to you and you have to enter a password, PIN ... it's NOT rude to politely ask them to turn around or take a few steps back so they cannot see what you're entering.
From Help Net Security:
Visual hacking exposed
While most security professionals focus on thwarting data breaches from cyber attacks, a new study exposes visual hacking, a low-tech method used to capture sensitive, confidential and private information for unauthorized use, as an under-addressed corporate risk.
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