(NYTIMES) – You are expected to do much of the holiday shopping online this year even as the pandemic recedes, and it is expected that criminals will be following along. So here are some tips for safe digital shopping.
There is a steady rise in online card fraud in recent years, and it accelerated during the pandemic as more people shopped on the Internet to avoid brick-and-mortar stores. Losses from online card fraud are expected to reach almost US$8 billion (S$10.8 billion) by the end of this year and that’s just in the United States.
At the same time, consumers still expect to do about two-thirds of their holiday spending this year online, even though they feel less anxious about shopping in stores, according to a holiday retail survey published by Deloitte.
And with tight supplies of merchandise and shipping delays from the lingering effects of the pandemic, holiday shoppers may turn to less familiar, less secure websites in search of the perfect gift.
“The supply shortage is drawing people to ever more peripheral websites,” said Mr Brian Hamilton, chief executive of One, a start-up digital banking service.
His company is seeing more disputed transactions, which is also happening in the broader payments and banking industry, he said.
Credit cards are often considered the safest payment option when shopping online because they have strong, federally mandated consumer protections. If you have a disagreement with a merchant or receive a defective product and can’t resolve the problem yourself, you can dispute it with your card company.
“The credit card goes to bat on your behalf,” said Mr Chuck Bell, programs director of advocacy with Consumer Reports.
And if your card is stolen or hacked and you spot unauthorised charges, you are not liable for them – or could be responsible for US$50 at most – if you report it promptly.
In addition, the major payment networks generally go beyond the requirements and extend zero fraud liability for credit card and certain debit card transactions, according to WalletHub.
Even so, having a card hacked can be a hassle. You’ll need to take time to report the matter to your card issuer. It will generally cancel your card and issue one with a new number, so you will need to reset any recurring payments or subscriptions.
For that reason, some shoppers may want to consider options like “virtual” credit cards or digital wallets, which add an extra layer of security when you use them.
Virtual cards are, in effect, temporary card numbers issued by your card company that are used to mask your real card number. You enter the virtual number when shopping online, and the merchant never sees your actual card number. So if the website is fraudulent, or if a legitimate site is breached, your card number is not exposed.
In some cases, there may be an extra step to take to use a virtual card. You must retrieve the virtual number from your credit card’s website and then enter it on the website where you are shopping, said Mr Ted Rossman, senior industry analyst at CreditCards.com. It does not take long, but the added time may discourage some shoppers, he said.
Services like ApplePay and GooglePay can also add protection when payment cards are used. The services create random account numbers or “tokens” that shield your real number when you make a purchase.
The services are handy when shopping in person because you can store your card numbers on your mobile phone’s wallet. They can also be used online, although availability varies by merchant. Look for the symbol for each payment option at checkout.
Here are some questions and answers about safe practices when shopping online:
1 How else can I protect myself?
Shop with a credit card online, and never buy anything from online sellers that accept payment only by gift cards, money transfers or cryptocurrency. Such payments are nearly impossible to trace and reverse, and criminals often tell people to use those methods so they can get cash quickly, the commission says.
Vet unfamiliar websites before shopping by searching online for the merchant’s name and the word “complaint” or “scam”, and read the seller’s description of the goods carefully. If the seller offers brand-name goods at steep discounts, they might be fakes.
The Privacy Rights Clearinghouse also recommends making sure the website shows a tiny lock icon, or https, in the checkout browser, indicating transactions are secure. You can also sign up for alerts from your bank or credit card so you are notified when purchases are made.
“The consumer really needs to be smart,” said Mr David Mattei, a strategic adviser specialising in payments fraud at Aite-Novarica Group. If major retailers are out of an item, he said, there is a good chance an online seller you have never heard of doesn’t have it either. And if a website asks for your personal details, he said, “that should be a red flag” that the site is not legitimate.
2 Can I use a debit card to shop online?
You can, but experts like the Privacy Rights Clearinghouse generally caution against it. That’s because if the card is compromised, funds are taken directly from your bank account. There are consumer protections in place, but it may take time to resolve the issue, and in the meantime, you may be out the cash.
“It’s a different feeling, to see money gone from your bank account,” said Mr Odysseas Papadimitriou, chief executive of financial website WalletHub.
3 What about ‘buy now, pay later’ services?
Online retailers are increasingly offering a “buy now, pay later” option at checkout; it allows you to buy an item and pay for it in instalments. Many online shoppers began using this type of credit during the pandemic. But these options lack the same buyer protections as traditional credit cards, according to the Consumer Financial Protection Bureau.
The providers let you pay for an item over time, as a credit card does, but without interest. Still, they may charge hefty late fees if you miss payments, and they don’t have the same dispute protections as credit cards if the product is faulty or damaged or turns out to be part of a scam.
And returning items bought with these services may be complicated. You may be responsible for the total cost of a purchase even after you’ve returned it. Be sure, the bureau says, to carefully read and understand the merchant’s specific return policies.