Gentlemen,
We are permanently discussing money systems on this list but
still can not decide which of them is or will become the most
convenient way to transfer value from one economically active party
to another. As a vice-president of WebMoney Transfer system
(http://www.wmtransfer.com or http://www.webmoney.ru ) mentioned in
the NYT article I have an idea. The best economic indicator of
convenience and trust in money system are its THIEVES! Ask
yourself, in which money system you would keep YOUR money if you
were a hacker or credit-card fraudster? The same insecure system
you just managed to steal from?
Of course not! You would keep your money in the systems that you
consider UNBREAKABLE by any means! And apparently THEY do. So, in a
broad sense, "hackers" & thieves ARE the best economic indicator of
quality, security, finality, convenience and trust in money system.
If they use your system - you may be proud of yourself (of course
only because you've really built something valuable <grin>), if they
steal money in your system and exchange to another - you'd better
change something in your aged, distrusted money system.
Any disguising creature was created for something by God, even
thieves. Like the poor, crooks will always be with us, I'm sure!
Seriously, all of us sometimes forget that the migration from present
money systems to digital currencies will take some time and will take
place in some (a few) grotesque forms, one of which is described in this
article. Unfortunately, the article mentions only a tiny percentage of
my system's business, and that may give a bad impression where
none is deserved. The US Federal Reserve is not blamed when a
bank is robbed, or even when "old dollars" get counterfeited, but a
new system like Webmoney ( or e-gold ) gets coverage only in the
context of upsetting uses, and not all the interesting uses evolving
from their superior features!!
It took some time for cars with internal combustion engine to conquer
the horse and buggy -- same with money transfer systems. And first
people to use mobility and speed of cars when they were invented
and who used them on a full scale were bootleggers and gangsters,
as far as I remember, but it didn't compromise this great invention and
its future.
The economically understandable rush to better monies will be long (if
not to say "eternal"), and will cause real harm to everybody who
prefers staying in a "steam engine age," relying on brute force of the
state and government for protection. Criminals who "need" finality of
settlement are merely unwelcome "opinion-leaders," IMO.
As to the article in NYT : we (WebMoney system) do not support (and
never did) any criminal activities, and we are ready to cooperate with
law enforcement agencies if they will be smart enough to approach us
with court orders (in fact, they have done that already, a couple of
times), but I'm quite sure their personnel are not proficient enough
at this time to fully understand the situation with concurrence of
technologically progressive DCs and traditional money systems which
are not up to date in a technological sense at all. If any DO
understand,
someone tends to hire them at a higher salary than police agencies
(or the New York Times, for that matter) will ever pay. That's the
situation.
And this is our comment to the article below.
Regards, Alexander V. Fedotov
______________________________________________________________
[EMAIL PROTECTED] http://www.indx.ru/eng
[EMAIL PROTECTED] http://www.wmtransfer.com
http://www.webmoney.ru
(article).
...
-----Original Message-----
From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of R. A.
Hettinga
Sent: Monday, May 13, 2002 10:23 AM
To: Digital Bearer Settlement List
Subject: Credit Card Theft Thrives Online as Global Market Losses Grow
http://www.nytimes.com/2002/05/13/technology/13CARD.html?pagewanted=prin
t&position=top
May 13, 2002
Credit Card Theft Thrives Online as Global Market Losses Grow
By MATT RICHTEL
ens of thousands of stolen credit-card numbers are being offered for
sale
each week on the Internet in a handful of thriving, membership-only
cyberbazaars, operated largely by residents of the former Soviet Union,
who have become central players in credit-card and identity theft.
The marketplaces - where credit card prices fluctuate with supply and
demand in a sort of black stock market - offer a window into a crime
that
costs the financial system $1 billion or more a year. They also show how
readily personal information is being stolen and traded in the computer
age.
But the same Internet technology that has enabled the theft and sale of
credit cards also provides a veritable transcript of the criminal
activity,
and a real-time peephole into the attitudes, ethic - and sometimes honor
-
among the thieves. The chat forums indicate as well that several dozen
of
the top participants recently have discussed gathering at a credit-card
reseller's conference in Odessa, Ukraine, at the end of this month.
"It's straight out of Capitalism 101 - it's become a big industry," said
one high-technology executive who surreptitiously monitors the Internet
card markets, and who noted that the market price of credit cards
fluctuates daily based on supply - which, he said, is copious. "There
appears to be an endless supply of cards out there," he said.
In recent days, the cost of a single credit card has been between 40
cents
and $5 depending on the level of authenticating information provided.
But
the credit-card numbers typically are offered in bulk, costing, for
example, $100 for 250 cards, to $1,000 for 5,000 cards, with the sellers
offering guarantees that the credit-card numbers are valid.
Security experts say the buyers of the card numbers in these forums are
all
over the world, but often come from the former Soviet Union, Eastern
Europe
and Asia, specifically Malaysia. The buyers use the numbers in a variety
of
frauds, including making purchases over the Internet, having them fenced
in
the West, or even extracting cash advances directly from the credit-card
accounts.
Security experts say the people living in the former Soviet Union -
often
in Russia and Ukraine - who are operating the marketplaces are typically
buying the card numbers from so-called black-hat 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.
"This is highlighting a tremendous lack of security," said Richard
Power,
editorial director of the Computer Security Institute, an association of
computer security professionals that recently published a report with
the
Federal Bureau of Investigation on computer crime. "In the old days,
people
robbed stagecoaches and knocked off armored trucks. Now they're knocking
off servers."
The ultimate cost of this is hard to estimate, according to financial
analysts, though they say it is a fraction of the total size of the
credit-card industry. A recent survey from Celent Communications, a
market
research firm, found that credit-card payment fraud will cost online
merchants a minimum of $1 billion a year, which is not insignificant,
though it pales in comparison to the more than $900 billion that Visa
alone
processes annually.
The cost to individual businesses, however, can be dramatic. In January
2000, an extortionist based in Russia demanded $100,000 from an Internet
music retailer, CD Universe, by posting credit-card numbers stolen from
the
company's database to a Web site, which was subsequently shut down by
the
F.B.I. Last year, people close to Flooz.com, a bankrupt purveyor of
certificates used for online purchases, said one reason the company
failed
was that it had unknowingly sold $300,000 of its currency to credit-card
thieves in Russia and the Philippines.
Generally speaking, the Celent report found that the fraud rate on the
Internet is 0.25 percent for Visa and MasterCard transactions,
significantly higher than the 0.08 percent for Visa and 0.09 percent for
MasterCard in the offline world. The typical consumer is generally
protected from these costs, since consumers are not held liable for most
fraudulent charges, but credit-card interest rates can rise because of
crime, and consumers may have to deal with the aggravation of removing
charges they did not make.
Mr. Power, from the Computer Security Institute, said: "You don't want
to
be an alarmist and say, `The sky is falling, and Visa is going to
crumble.'
But the financial losses involved in this kind of theft are
underestimated,
underreported and underacknowledged," estimating the worldwide cost is
in
the "double-digit billions."
"There's a lot more hemorrhaging going on than some people believe," he
said.
The Internet sites of the online marketplaces are mostly known only to
their participants - though that number can run as high as 2,000
registered
users. The site operators change their online addresses frequently to
prevent monitoring by law enforcement. In the past, credit-card
traffickers
did business in private chat rooms on the Internet Relay Chat, a
communication network, and now they also use the World Wide Web, where
it
is easy to start and shut down sites to avoid detection.
But there are security professionals who surreptitiously listen in,
tracking the supply of card numbers and prices.
John Shaughnessy, senior vice president for risk management and fraud
control at Visa USA, said the company was aware of online marketplaces
and
sought to monitor them, when it could find them. He said it appeared
that
many of the buyers and sellers of cards were in Asian countries and the
former Soviet Union. Some people familiar with the trend have also said
that stolen credit cards were being purchased by people in Saudi Arabia
and
Dubai, United Arab Emirates.
Mr. Shaughnessy said Visa had worked closely with the F.B.I. on these
issues. Officials at the F.B.I. did not return calls for comment.
Even though the activities of the marketplace can be monitored, this
does
not mean participants can be easily caught, since they do not use their
real names or give their whereabouts, and they make their payments
through
secure money transfers over the Internet that are not easily traced. But
the Web sites offer a profile of the typical participant and of the way
they do business.
A security expert who monitors several of the bazaars said one of the
most
active was run by a Ukrainian 18 or 19 years old who went by the name
"Script." The operator lives in Odessa. He is among about nine members
of a
clique, whose members call it "the family," and who are considered the
most
powerful and reliable of the middlemen.
In a recent transcript, the dealer who operates the forum posted in a
typical note: "I am selling Visa and MC (American cards)." He added,
"The
minimal deal size is 40$."
He also listed a higher price if the deal included the card's CVV2 code,
a
printed security code that appears on credit cards and is supposed to
prevent fraud. Merchants are not supposed to record the code in their
databases, but they sometimes do, which means that hackers can get
access
to this higher level of information. On the online forum, the seller
noted
that 100 cards with the CVV2 code cost $300.
A discussion then ensued involving his former buyers, attesting to the
seller's reliability. One buyer wrote, "This guy's always slightly more
expensive, but his stuff is good." Another wrote: "This guy is awesome.
He
always gave me three times the number of cards I paid for."
The endorsements are a somewhat surreal reproduction of the rankings
given
to sellers on legitimate e-commerce sites, like the auction site eBay,
or
to authors by readers on Amazon.com. The feel of the site is one of pure
capitalism, replete with marketing. The seller who operates the site
sometimes posts online banner advertisements for his service.
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.
The discussions on the forum have a definite anti-Western bent,
particularly anti-American. They are critical of American foreign
policy.
Some of the members of the forum also express anti-Semitic views.
There is not much social interaction, but it is not unheard of. The
participants will brag about using their spoils to take vacations, for
instance, to Bulgaria or Dubai.
Recently, there was a discussion that nearly 40 members of the group
would
meet in Odessa on May 31, at the first "World Carders" conference,
though
the organizers appear to have moved the talk to a more private setting.
Copyright 2002 The New York Times Company | Permissions | Privacy
Policy
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