I am always amused when someone says, "I am afraid to use credit cards online. May I send you a check?"
In effect, that person is saying, "I am afraid to use the safe method. May I use the more dangerous method of sending money?"
Being able to use your credit card online or to use services like PayPal makes purchasing items online very easy. Online shopping with credit cards is also safe and secure. Online shopping is often more convenient than shopping in person or by mail order or telephone. Whether you are buying from an online store, ordering online from a delivery service, or bidding at online auctions, you do need to be careful about your personal and financial details.
Here are some basic safety tips for online shopping and auctions:
- Where possible, use a secure online payment service like PayPal or WorldPay. These services never show your credit card number to the merchant, a major improvement in credit card security. PayPal and WorldPay services are fully bonded and insured. Even if the merchant turns out to be fraudulent, PayPal or WorldPay will make sure you get your money back.
- Credit cards provide far more protection than do checks for U.S. consumers. Federal law limits consumer liability in credit card fraud cases to $50 per card, and most credit card companies will even pay the $50, as will PayPal. There is no such protection for most personal checks. [See the notes below.]
- Use credit cards rather than debit cards. The two may look alike, but they are quite different. Credit cards are fully insured against fraudulent merchants, and VISA/MasterCard/American Express/Discover will always refund your money if you are ripped off by online merchants. While debit cards are technically the same as checks, they may or may not be insured by your local bank. They are never insured by VISA/MasterCard/American Express/Discover, even though that company's logo may appear on the debit card. When dealing with unknown merchants, always use an insured credit card, not an uninsured debit card.
- Don't keep your personal or financial information (including account passwords) in a plain text file on your computer. Store all sensitive information in encrypted files.
- Don't give out personal or financial information to vendors over the phone, through the mail, or online unless you are absolutely certain that your contact is legitimate.
- Keep a record of what you pay for, and always check your online purchases against your statement[s].
- Always check the privacy policy of any web site that requests personal details. If the web site is requesting this type of information and does not have a privacy policy, it is not wise to submit your information. Never enter your personal information into social networking web sites (Facebook, MySpace, Orkut, Bebo, Friendster, etc.) These sites have poor records at protecting personal information.
- When submitting information online, make sure there is a "lock" icon on the browser's status bar and that it is "locked." Also, check that you are connected to a web address that begins with "https." The "s" means a secure, encrypted (SSL) connection.
- Never send a check in the mail. More checks are stolen from the mail every day than from any other source. Unfortunately, checks are (usually) not insured. If the thief cashes your check, you lose the money. In contrast, VISA/MasterCard/American Express/Discover credit cards used in online transactions are fully insured. If a thief takes your money in an online credit card transaction, you can get the money back from the credit card companies. [See the notes below.]
- When traveling, never keep all your credit cards and all your cash in one place, such as in a wallet. Split them up and keep them in two different places, such as one wallet in your pocket plus another in a carry-on case. When traveling with a companion, give half your money and credit cards to your companion for safe keeping. In case of theft or accidental loss, you probably will still have half of your credit cards and cash available.
- Keep a list of all credit card numbers and expiration dates in a safe place, along with the customer service telephone numbers of each issuing company. The telephone numbers are typically found on the back of each credit card. (I keep my list online in an encrypted file so that I may access it even when traveling, if needed. Using encryption with a "heavy duty" password provides excellent security against prying eyes.)
- Keep your operating system, anti-virus, anti-spyware, and firewall software up to date.
- Use anti-virus software and/or firewalls on every Windows computer you own/use.
NOTES:
1. VISA/MasterCard/American Express/Discover fully insure online transactions for customers in the United States and Canada. They may or may not insure in-person, mail order, or telephone orders.
The "zero liability" policies of VISA and MasterCard both contain significant loopholes. For example, VISA’s policy does not cover consumers if the card was processed outside the VISA network, and MasterCard’s policy only applies to the first two unauthorized transactions in one year. If you suffer a third fraudulent charge within twelve months, MasterCard will not pay.
American Express insures against all fraudulent charges. Period.
For details, read the following:
VISA: http://usa.visa.com/personal/security/visa_security_program/zero_liability.html
MasterCard: http://www.mastercard.com/us/personal/en/learningcenter/stayingsecure/index.html
American Express: Use the American Express card online or off, and you won't be held responsible for any fraudulent charges. Period. If someone uses your American Express card without your consent, you'll never pay any part of the fraudulent charges—not even the first $50. See http://tinyurl.com/4sjcmb
Discover Card: You're not responsible for any unauthorized charges on your account—online, offline, anytime, anywhere, with absolutely NO deductible. See http://www.discovercard.com/discover/data/account/stopfraud.shtml
2. PayPal provides DOUBLE insurance. The company insures all online transactions against fraud. In addition, if the PayPal transaction is funded by a credit card, that credit card company also provides similar insurance. You won't get paid double the amount of your loss, but you are assured that the two companies will work together to make sure you always get 100% of your money back. PayPal even pays the $50 deductible.
3. The laws concerning a maximum of $50 liability apply only to U.S. consumers who purchase from merchants in the United States. Use caution when making purchases from merchants in other countries.
4. Personal checks typically are not insured against fraudulent charges although a few banks may offer such insurance. Check with your bank to determine what protection you have, if any.
5. Encryption is an excellent solution but should always use strong passwords. Passwords should be long, contain a mix of letters and numbers, and not be something that is easily guessed. Passwords should be at least eight letters long, and even longer passwords are better yet. Avoid the names of your spouse, your children, family pets, and similar passwords that can easily be guessed by a knowledgeable thief.
6.Remember that security experts report that identity thieves are rarely strangers. Most cases of identity theft are performed by people who are acquainted with the victim. The most common occurrence is identity theft by relatives, but neighbors, friends, and casual acquaintances are also suspect. Keep your information private, even from your own family.
7.Theft of credit card numbers rarely happens with online transactions. Most credit card numbers are stolen during in-person transactions at stores, restaurants, gas stations, and similar in-person transactions.
Shopping online is a wonderful convenience. Besides saving time and gas money, you can often find the items you want at better prices or even find better items than you would by cruising the malls. By putting a few security steps into action, your online shopping excursions also can give you the greatest peace of mind and even better security than shopping in person.
