Another Italy Net Scam Uses U.S. Banking Info

ROME (03/07/2000) - U.S. President Bill Clinton doesn't trust the Internet for sending e-mail to his daughter, and Italians are beginning to wonder whether it is safe to use for electronic commerce following two highly publicized cases of online fraud in the last two weeks.

Finance police in Catania last Friday arrested an Italian couple accused of Internet fraud using illegally obtained American credit card numbers. Giuseppe Russo, 34, and Sandra Elazar, an Israeli citizen, are the first hackers ever to be arrested in Italy for online fraud, police said.

Two weeks earlier, in a separate case, 10 people were reported to Italian judicial authorities as having used illegally acquired U.S. credit card details to make fraudulent online purchases of electronic equipment. [See "Italian Police Identify Internet Fraud Gang," Feb. 22.]The Catania-based couple allegedly used the cards to gamble online, placing thousands of bets worth a total of more than 1.5 billion lire (US$750,000) in the space of one month and turning them into winnings of over 800 million lire.

The bets were placed with an online betting shop based in the northern city of Bergamo (http://www.lotto.bg.it), which found it had to take on extra staff to cope with the sudden increase in business, police said.

Almost all the fraudulently used cards were issued by two U.S. banks, the Chase Manhattan Bank Corp. of Wilmington, Delaware, and Citybank Universal Bank of Columbus, Georgia, according to a prepared statement by the finance police.

"They were in possession of thousands of credit card numbers which we believe were obtained by hacking into the security systems of the two banks," said Captain Giancarlo Sulsenti, who coordinated the eight-month investigation which began after complaints from some of the American card owners. The hackers may even have succeeded in obtaining the secret algorithms used by the banks to generate credit card numbers, Sulsenti said.

As well as gambling on Italy's national lottery, the couple bought records, clothes, watches and life insurance and even used Interflora's online service to send flowers to friends around the world, police said. The couple bought so many books from Amazon.com Inc. that they were able to open a public library, stocked with volumes in English, Croat, German and Hebrew, Sulsenti said.

The couple were arrested under the terms of a law against credit card fraud that was passed in 1991, years before the development of Internet in its present form.

"Legislators have considerable difficulty in keeping up with the pace of technological progress," Sulsenti said. "A lot needs to be done to improve the security of online transactions. There's need for a greater collective consciousness about security, both on the part of those who navigate the Web and those who offer products and services for sale."

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