They're not necessarily storing passwords in the clear (though the Texas Secretary of State does[1], so it wouldn't surprise me).
For example, when updating a password on Facebook, they check to see if your new password is similar to your previous one by creating several variants of the new password, hashing them, and seeing if the hash matches any of your old password hashes.
For example, when updating a password on Facebook, they check to see if your new password is similar to your previous one by creating several variants of the new password, hashing them, and seeing if the hash matches any of your old password hashes.
[1] http://plaintextoffenders.com/post/68152196480/sos-state-tx-...