Thousands of stolen credit card numbers are being traded and bought in secret online marketplaces, say Internet experts.
These cyber-bazaars, operated from the former Soviet Union, offer stolen credit card numbers to bidders.
A single credit card can sell for between 40¢ U.S. to $5 while a block of 250 numbers sells for $100.
Broadhead says he has no doubts Canadians have been affected by the creation of these black cyber-markets.
The cyber-marketeers buy the card numbers from computer hackers. These hackers obtain the card numbers by breaking into computer systems of online merchants and getting access to thousands of credit-card records at a time.
Buyers are from the former Soviet Union, Eastern Europe and Asia
Buyers of the card numbers are often from the former Soviet Union, Eastern Europe and Asia. The buyers use them in a variety of frauds such as making purchases over the Internet or even extracting cash advances directly from the credit-card accounts.
The sellers usually ask for payment to be made through online accounts, like www.WebMoney.ru, where money can be electronically deposited, wired, then transferred to a bank account.
Internet experts say companies need to spend more money on security.
Richard Power, head of the Computer Security Institute, says numbers are stolen from insecure servers. He says online merchants need to report breaches to the police but many are afraid to risk their reputation by admitting a breach has occured.
Credit card companies are fighting back. In 2003, Verification by Visa will begin in Canada. Under the program, customers set up passwords with their bank to make online purchases with Verification merchants.
Other ways of protecting credit card numbers is to store them without their expiry dates and then storing the names and addresses separately from the numbers.