How to protect yourself against online card fraud
Americans are expected to do much of their holiday shopping online this year even as the pandemic recedes, and criminals should follow them. So here are some tips for safe digital shopping.
The United States has seen a steady increase in online card fraud in recent years, and it has accelerated during the pandemic as more people shopped on the internet to avoid physical stores, according to a recent report from Aite-Novarica Group, a business and technology consultant. Losses from online card fraud are expected to reach nearly $ 8 billion by the end of this year, up from around $ 6 billion in 2019, according to the report.
At the same time, consumers still expect to spend about two-thirds of their vacation spending this year online, even though they feel less anxious about shopping in-store, according to a survey on holiday retail released last week by Deloitte.
And with the tight supply of merchandise and shipping delays due to the lingering effects of the pandemic, holiday shoppers may turn to less familiar and less secure websites in search of the perfect gift.
“The supply shortage is pulling people to increasingly peripheral websites,” said Brian Hamilton, managing director of One, a digital banking startup.
His business is seeing more and 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 offer strong federally mandated consumer protections. If you have a disagreement with a merchant or receive a defective product and you cannot resolve the issue yourself, you can dispute it with your card company.
“The credit card is going to fight in your name,” said Chuck Bell, director of advocacy programs at Consumer Reports.
And if your card is stolen or hacked and you spot unauthorized charges, you’re not responsible – or could be liable for up to $ 50 – if you report it early.
Additionally, major payment networks typically go beyond the requirements and extend zero fraud liability for credit card and certain debit card transactions, according to WalletHub.
Even so, having a pirated card can be a problem. You will need to take the time to report the problem to your card issuer. It will usually cancel your card and issue one with a new number, so you will need to reset any recurring payments or subscriptions.
For this reason, some buyers 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 which 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 scam or a legitimate site is breached, your card number is not exposed.
In some cases, there may be an additional step to be taken to use a virtual card. You need to retrieve the virtual number from your credit card’s website and then enter it on the website where you shop, said Ted Rossman, senior industry analyst at CreditCards.com. It doesn’t take long, but the extra time can put some buyers off, he said.
Citibank and Capital One both offer credit cards with virtual options. (The version of Capital One works as an extension on your internet browser, said a spokesperson for the bank, so there’s no need to visit another website after signing up. The virtual number is added automatically when you sign up. pay.)
Hamilton said One also offers virtual cards, for debit and credit cards.
Services like ApplePay and GooglePay can also add protection when payment cards are used. The services create random account numbers, or “tokens,” which protect your real number when you make a purchase. The services come in handy when shopping in person as you can store your card numbers in your cell phone wallet. They can also be used online, although availability varies by merchant. Look for the symbol for each payment option at checkout.
Tokens and other security features are also used by the “Click to Pay” service, an offering from major card processing networks, including Visa and Mastercard, recommended by the American Bankers Association. You must register your credit or debit card on the network’s website or through your card company, then select the “Click to Pay” button when making a purchase on a retailer’s website. .
The service is used by more than 10,000 merchants and has “tens of millions” of cardholder participants, said Sukhmani Dev, senior vice president of digital products, North America, at Mastercard.
Here are some questions and answers on safe practices when shopping online:
Question: How can I protect myself otherwise?
A: The Federal Trade Commission offers these tips: Buy online with a credit card, and never buy anything from online sellers who only accept payment by gift cards, money transfers, or cryptocurrency. Such payments are almost impossible to trace and reverse, and criminals often tell people to use these methods so they can get money quickly, according to the commission.
Check unfamiliar websites before shopping by searching online for the merchant’s name and the word “complaint” or “scam,” the agency advises, and carefully read the seller’s description of the goods. If the seller offers branded products at significant discounts, the agency said, “They could be fakes.”
The Privacy Rights Clearinghouse also recommends ensuring that the website displays a small lock icon, or https, in the payment browser, indicating that transactions are secure. You can also sign up for alerts from your bank or credit card to be notified when purchases are made.
“The American consumer really has to be smart,” said David Mattei, strategic advisor specializing in payment fraud at Aite-Novarica Group. If major retailers are running out of an item, he said, there’s a good chance an online seller you’ve never heard of either won’t. And if a website asks for details like your social security number, he said, “that should be a red flag” that the site isn’t legitimate.
Question: Can I use a debit card to buy online?
A: You can, but experts like the Privacy Rights Clearinghouse generally warn against this. Indeed, if the card is compromised, the funds are withdrawn directly from your bank account. Consumer protections are in place, but it may take time to resolve the issue and in the meantime you could lose your money.
“It’s a different feeling to see money disappear from your bank account,” said Odysseas Papadimitriou, managing director of financial website WalletHub.
Q: What about “buy now, pay later” services?
A: Online retailers increasingly offer the option of buy it now and pay later at checkout; it allows you to buy an item and pay for it in installments. Many online shoppers started using this type of credit during the pandemic. But these options don’t have the same buyer protections as traditional credit cards, according to the Consumer Financial Protection Bureau.
Suppliers allow you to pay for an item over time, like a credit card, but without interest. Still, they can charge large late fees if you miss payments, and they don’t have the same litigation protections as credit cards if the product is faulty or damaged or turns out to be part of a scam. . And returning items purchased with these services can be complicated. You may be responsible for the full cost of a purchase even after returning it. Make sure, the office says, that you carefully read and understand the merchant’s specific return policies.