The same application also stored my full password in localStorage and a cookie (without httponly or secure). Because reasons. Sigh.
I'm going to do a hot take and say that WAFs are bollocks mainly used by garbage software. I'm not saying a good developer can't make a mistake and write a path traversal, but if you're really worried about that then there are better ways to prevent that than this approach which obviously is going to negatively impact users in weird and mysterious ways. It's like the naïve /(fuck|shit|...)/g-type "bad word filter". It shows a fundamental lack of care and/or competency.
Aside: is anyone still storing passwords in /etc/passwd? Storing the password in a different root-only file (/etc/shadow, /etc/master.passwd, etc.) has been a thing on every major system since the 90s AFAIK?