The identities of 38,000 customers of online sportswear firm Cotton Traders have been declared at risk after the its website was hacked earlier this year and credit card details compromised.

The firm said that most of the cards affected were stopped back in January, as soon as the security breach was discovered.

When data breaches like this occur customers face the risk of “identity theft” because criminals can use the details they discover to make fraudulent applications for loans or online purchases.

The card industry body Apacs said that a specialist police unit  was investigating the case. “Card not present” fraud, where a criminal uses someone else’s card details to make a purchase, has soared since the introduction of  the chip and pin security system for credit cards in 2006, which has meant that most retailers no longer rely on signatures for goods, making it harder to commit face-to-face fraud.

According to the latest Apacs figures, card fraud hit a record £535.2 million in 2007, of which card-not-present fraud amounted to £290.5 million, an increase of 37% on 2006.

Last year TK Maxx lost 45 million card details in a similar online attack.

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