Online Shopping Keeps Growing, and…

Online security is now more important than ever.

I’ve been reading recurring reports on this so maybe there is some truth to it after all. CNN Money reports that more and more people are skipping the mall and shopping online. Within the next six years online sales is expected to grow at a 15 percent compound annual growth rate. Online sales will more than double from $144 billion in 2004 to $331 billion in 2010, and thirteen percent of all retail sales will be online.

Likewise, as online shopping becomes part of consumers’ lives it is more important than ever to safeguard your credit card number and your identity. Here are five tips to make sure you’re cyber-safe:

1. Shop with those you know;
Shop with companies you are familiar with. Anyone can set up a shop online under almost any name.

If you’re dealing with a reputable vendor, chances are good the company will take measures to protect your privacy. Make sure there is a privacy policy posted on the Web site and that you fully understand how your personal information will be used.

Next, ask yourself, will the seller be at the same Web address tomorrow? The Better Business Bureau warns consumers to be wary if the seller’s only contact information is a post office box.

Another good source is Consumers Reports. On their Web site, you’ll find its e-ratings and Web site reviews of retailers.

If you’re into online auctions, on eBay’s site there is a feedback section, where buyers can comment on those they purchased from. Did they send the item in a timely fashion? Was the item in good condition? Sometimes listening to others is the best resource.

2. Be secure;
Before you send any private information over the Internet, make sure you are dealing with a secure Web site. Many retailers use a technology known as SSL or Secure Sockets Layer. This encrypts credit card information sent through cyberspace.

Hint: if the Web address on the page asking for your credit card information begins with “https:” instead of “http:” the technology is in place. Secure Electronic Transaction or SET is another option for securing a Web site. Another way to be sure that you are dealing with a secure Web site is to look for an icon of a locked padlock or an unbroken key at the bottom of the screen.

If you are still unsure about the site’s security, check out the privacy policy that we mentioned earlier. It is here that you will most likely find out more about the company’s security technology.

It also helps if the company has a seal of approval from a privacy enforcement organization such as the Better Business Bureau Online Reliability Seal. Log onto www.bbbonline.org for more information. In addition to the Better Business Bureau, you can also contact the FTC or your state attorney general’s office to file a complaint.

3. Be particular with passwords;
The next step in securing your information is creating a password. When shopping online you may be asked to create a password before placing an order.

The key here is not to choose a password based on your birth date, telephone number or Social Security number. Try to be a bit more creative by scrambling letters or numbers that someone cannot trace back to your personal information.

Once you do shop, you’ll want to get details like delivery dates, shipping and handling fees, warranties and return policies from the merchant’s Web site. And print out a copy of your online order for your records.

4. Pay with plastic;
Paying with a credit card for online purchases is among the safest ways to go. Your transaction is protected by the Fair Credit Billing Act. This law gives you the right to dispute charges and to withhold payment until the problem is resolved by the creditor. And if the card is stolen or used fraudulently, the consumer is typically liable for only a small portion of the amount, usually no more than $50.

The FTC says some companies even offer an online guarantee that ensures you will not be held responsible for any unauthorized charges made online.

Debit cards are another option consumers may choose. But be careful. The money from debit purchases is typically immediately transferred from your bank account to the merchant’s. And your liability limits for unauthorized activity with a debit card are different from those for a credit card. With a debit card you can be held responsible from $50 to $500 or even more.

If you’re an online shopper, you may want to make extra sure you’re protected when shopping via the Web. That’s where “virtual card numbers” come in. A virtual card number is simply a disposable, randomly generated credit card number that shoppers can use once and throw away when shopping online.

It’s linked directly to your real credit card account, so the purchases you make with it will be reflected on your monthly credit card bill. Not only does the virtual card protect users from thieves, it’s also free. All you need to do is register for the service. In most cases, this involves downloading software from your card issuer’s Web site.

These virtual numbers are easy to use when you shop online but they don’t work for everything. You can’t pick up movie tickets with a virtual credit card. Nor can you confirm car or hotel reservations with a credit card that doesn’t exist. Since the numbers are temporary, paying recurring, monthly bills could also be problematic. Some of the companies offering the virtual card service are MBNA, Discover and Citigroup.

5. Watch out for imitators;
One rapidly spreading scam is “phishing,” the practice of fooling unsuspecting shoppers into giving away private information by sending e-mails that appear to come from legitimate sites. Click here for more information about this and other online security issues.

The Better Business Bureau says be careful about responding to an e-mail or phone call from anyone who asks for your password. This also holds true if someone asks for your Social Security number, credit card number or bank account information.

The Bureau suggests verifying that person really does work for the company. One tip: call the company directly and ask to speak to that person. You want to be suspicious if you are asked to provide information you usually wouldn’t be asked for when making a purchase.

For example, do you need to give your Social Security number or birth date when you buy something in a store? Usually not. Therefore, if the merchant requests your Social Security number, birth date or personal bank information - decline. And never volunteer answers for optional questions. Only offer what is needed to complete the deal.