WIRE:03/10/2000 14:56:00 ET FOCUS-Card alert for French banks PARIS, March 10 (Reuters) - France braced for a wave of petty fraud after officials admitted on Friday that a formula posted on the Internet showed how to forge smart payment cards.

But Cartes Bancaires, the French interbank group whose card system is affected, said there was no danger that bank accounts would be emptied.

Cards made with the formula might be used to buy train tickets or pay parking meters or toll booths although there was no evidence this had actually happened, Cartes Bancaires spokesman Herve de Lacotte told Reuters.

"For the first time in 10 years, a lock has been sprung," he said. "But springing a lock will not necessarily open the door and let you in. There is a theoretical risk of fraud but the problem concerns banks, not consumers or shops."

Despite claims to the contrary, Lacotte said, false cards made with the code could not be used in cash dispensers, to make shop purchases or for expensive goods.

Newspapers leaped on the story, quoting experts as saying the complex 96-digit code could be used to forge three in four of France's 34 million bank cards.

Headlines like "Chip card secret out" left anyone with a bank card wondering whether their money was safe.

"Consumers have been paying for bank cards that aren't even secure. They've been cheated and lied to," said Eric April, Secretary-General of the AFOC consumer group.

Lacotte said the scare stories were over the top and the Bank of France accused the press of "exaggerating the risk."

"Even if certain clues relating to this algorithm have been made public... other security measures exist enabling strong limits on the use that can be made of this information," the French central bank said in a statement.

Cards issued since last autumn had added security which meant the pirate formula would not work for them, he added.

SCSSI, the government body in charge of information security systems, urged banks to replace older cards with updated ones.

The card formula was posted anonymously on Internet chat site last weekend. It was actually discovered three years ago by computer whizzkid Serge Humpich, who denies using it or circulating but has been given a 10-month suspended prison sentence for cracking the banks' secret.

Now that it is public, Humpich says, pirates could buy a chip card kit for around $370 and be turning out false cards within weeks.

"A few weeks from now dozens of false cards are going to appear," he told Liberation.

http://abcnews.go.com/wire/World/reuters20000310_2696.html

-- Martin Thompson (mthom1927@aol.com), March 10, 2000