How many websites do you currently visit that require you to log in with a username and password? Five? Dozens? And how many times do you type the same password into many different sites? If you’re like most people, you probably don’t invent an entirely new password for each site. How could you possibly remember them all?

This is just one way in which the current system of online security is broken, according to the Obama administration. Now the Commerce Department has a roadmap for figuring out how to fix it. The department recently released a “National Strategy for Trusted Identities in Cyberspace,” and it’s intended to bring new levels of trust to online commerce.

“The fact is that the ‘old’ password and user-name combination we often use to verify people is no longer good enough.  It leaves too many consumers, government agencies and businesses vulnerable to ID and data theft,” Commerce Secretary Gary Locke said in a press conference. “This is why the Internet still faces something of a ‘trust’ issue.  And it will not reach its full potential—commercial or otherwise—until users and consumers feel more secure than they do today when they go online.”

[Article: The Epsilon Breach: Don’t Take the Bait With Phishing Scams]

The administration’s plan veers away from the model implemented in some European countries, in which a government agency hands out identification numbers that people can use online. That “creates unacceptable privacy and civil liberties issues,” Locke said.

Instead, the department wants private companies to come up with a system of “identity credentials” stored on smart cards or cell phones. Consumers could plug the cards or phones into computers to check their bank accounts, make online purchases or log in to email accounts.

The administration hopes that better authentication of online users could help reduce the number of people defrauded online. Last year 8.1 million Americans were victims of identity theft or fraud last year, costing them $37 billion, according to the Commerce Department.

[Fraud Resource: Free Identity Risk Score and personal risk profile]

Image: Eric Schmuttenmaer, via Flickr.com