Keeping safe online: shopping

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Shopping and paying bills has never been easier. But how do you make sure that your transactions are safe from hackers and scammers?

As more commerce moves online, the fraudsters are upping their game, as evidenced by the many recent incidents of large-scale credit card theft. While there will always be some risk in conducting financial business online (as there is in using a credit card for anything), you can take steps to keep yourself safe.

Use a private computer with a secure internet connection. Do not conduct your online transactions using a public computer, such as in a library or internet cafe. Even if you are using your own computer, do not provide any financial information over public wifi. And when you are at home or visiting friends, make sure that you have a secure wireless network. (See this article for instructions on how to secure your wireless home network.)

Make sure that your password is as strong as possible and that the website is secure and uses encryption. (For more on this, see my recent blog posts on password security and phishing.) 

Minimize your financial exposure:

  • Use a credit card rather than a debit card. If you use a credit card online, federal law assures that you have no liability for unauthorized charges, assuming that you promptly notify the card issuer as soon as you know of the theft. With a debit card, your potential liability is much higher, up to the full amount of the withdrawal. (See this guide from Nolo for a more complete explanation of potential liability.)
  • Use an online payment service, such as PayPal. With PayPal, your credit card information is stored securely with the service and not shared with the online merchants. If you notice a transaction that you did not authorize, you can dispute it; PayPal offers 100% protection against unauthorized transactions sent from your account.
  • Dedicate a single credit card for online purchases. Use a different credit card for online purchases than for your everyday purchases or automatic payments. This way, if you need to close the account because of fraudulent activity, you will not have to change all of your scheduled payments.
  • Use a disposable credit card number, such as Bank of America’s ShopSafe. Many major banks offer temporary card numbers for online purchases. After logging in to your online banking, you follow instructions to generate a temporary 16-digit number, with expiration date and security code, that links directly to your real credit card account number. The vendor never sees your actual credit card number.
  • Monitor your credit card or other online account statements regularly. You will only be protected against fraud if you promptly report the problem.