Buying anything online generally means you will need to use a credit card, which can make many people wary. While there have been a lot of advances in online credit card safety, that doesn't mean you should not be careful.
Dangers of Using Credit Cards Online
Most fears people have about using credit cards online are somewhat justified. Possible dangers include:
- Identity Theft - This occurs when someone is able to obtain your personal information and then creates new accounts in your name.
- Credit Card Fraud - Similar to identity theft, but this involves someone simply using your existing credit account to make purchases.
- Data Breach - This happens when a hacker accesses a company's database to obtain stored credit card information.
While online credit card fraud is a legitimate concern, most thieves do not obtain credit card numbers directly through people shopping online. According to the Federal Trade Commission's Consumer Sentinel Data Book, in the years 2010 through 2012, 10% of Americans were victims of credit card fraud. Of those victims:
- 38% cited their first method of contact as email
- 34% cited a phone call
- 9% cited the postal mail
- 7% cited other - such as in person
Just 12% mentioned a website. In other words, it's more important to watch for phishing emails if you are looking at the odds of being victimized than it is to avoid shopping online.
How to Protect Yourself
To completely avoid these dangers, you would have to stop using credit cards altogether. Even if you do so, you can still be a victim of identity theft or a data breach, since other personal information, such as your Social Security number, is actually more valuable than your credit card number. Instead, inform yourself about the ways to prevent fraud.
Be Careful Which Websites You Visit
Some websites are more legitimate than others. To avoid using fraudulent sites, stick to ones you know to be legitimate when doing your online shopping. If a site looks questionable, it's better to err on the side of caution and not make a purchase from it.
Some red flags include if the company does not have a phone number listed or the number goes straight to a generic voicemail or if the website is rife with pay per click advertising. Online reviews may or may not be reliable, since the thief may write the reviews himself or ask associates to do so.
Know Your Credit Card's Fraud Policy
Using your credit card online is much safer than using your debit card, since it is not directly tied to your bank account. Also, major credit card companies have policies in place in which you can get reimbursed if someone uses your account number without your permission. For example, Visa has a zero liability policy when you notify your financial institution of the unauthorized use. If you are unsure of the policy on your account, call the customer service number on the back of your card.
Get a Temporary Card Number
You don't have to use your actual card number to shop online. Your card issuer can grant you a one-time use number for a specific transaction. This virtual credit card will be linked to your actual card, but if a thief gets her hands on it, she will not be able to use it.
Not all companies give you this option, but big names like Citibank and Discover do. Call the number on the back of your card to see if the virtual option is available. If not, another option is buying a prepaid gift card to use online.
Check for a Secure Connection
If you're going to enter your credit card information, make sure you are at a secure address. You should see "https" at the beginning of the page's address as well as an icon of a padlock in the address bar.
Don't trust text on the website itself saying that the site is secure. This is a common tactic that thieves use. You must check the address bar to be sure. If your antivirus software gives you a warning when you visit the page, this is another good reason not to trust the site.
Shop from a Safe Place
While it is great that online shopping can be done from anywhere -- even from a mobile phone -- it is never good to do so unless you are on a private Wi-Fi network. If you shop online while you are in a coffee shop or library, it's fairly easy for anyone else on the same network to obtain your information. Always use a network that is protected by a password that is not available to the general public or anyone who stops in to buy a latte.
Check Your Statements
To get fraud resolved quickly, you need to know that it has occurred. Sometimes, your credit card company will contact you if charges appear out of the ordinary. Other times, you will notice only when you check your statement or your credit report. Thoroughly read your statements each month, and check your credit report at least once a year. Report any discrepancies immediately.