Which of the following describes the action of observing a user entering a password nearby?

The action of observing a user entering a password nearby is best described as shoulder surfing. This term specifically refers to the practice of looking over someone's shoulder to glean sensitive information, such as passwords or PINs, as they enter it on a device. Shoulder surfing is a physical form of observation that can occur in public spaces, where an individual intentionally or unintentionally exposes their information to onlookers.

The other options describe different types of fraudulent or intrusive actions but do not apply to the scenario of directly observing someone’s password entry. Scavenging involves collecting discarded items, often to find useful information or materials, but it does not involve direct observation. Snooping generally refers to secretly looking at or listening to someone’s private communications or activities, often through digital means rather than a physical observation. Phishing is a method of tricking individuals into providing sensitive information via deceptive emails or websites, which does not relate to the visual act of observing. Thus, shoulder surfing is the most accurate description of the action in question.