Is It Safe to Shop Online?

Have you avoided online shopping because you are nervous about using your credit card on the internet? Have you been scared off from online shopping because you have read scary headlines, such as the New York Times article: Credit Card Theft is Thriving Online as a Global Market? Read on to get the true story about shopping online.

What are the risks?

The Simple Answer
Using your credit card with a trusted retailer at their online web site is as safe, if not safer, than using your credit card at the store or over the telephone.

To protect yourself from the theft of credit card information and your personal identity, never respond to an email that requests your bank account number, credit card number, or password even if the email looks like it came from your bank, the government, or the Better Business Bureau. They will never request your private information through email. In addition, make sure your computer is set to automatically update software so that the programs on your computer have the latest security patches.

No one can guarantee that your credit card information will never be stolen, but the point is, managing your credit card information online is seen as just as safe, if not safer, than the ways you currently use your credit card. Read these articles about Protecting Yourself From Identity Theft and the Safety of Online Shopping from the Better Business Bureau and Visa Credit Cards. You might be surprised to learn that both organizations recommend you start banking online and stop mailing checks or receiving statements via mail as one measure to reduce your risk to identity theft.

Are you still nervous about using your credit card online with trusted retailers? If so, continue reading as we share reasons why it is as safe, if not safer, to use your credit card online with trusted retailers. We will also explain why so many news headlines describe the internet as such a scary place. Finally, we will provide simple precautions you need to take online whether you decide to use the internet for shopping or not.

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Compare Online to Offline Credit Card Safety

To help build your comfort when using your credit card on the internet with trusted companies, we will compare in detail the risks associated with using your credit card online, over the phone, and at the store.

Generally speaking, when you make a purchase at a store, your credit card is swiped in a reader. The magnetic stripe on your card includes more data, in a format that is more useful for criminals to duplicate, than credit card data you send over the internet. The information collected on a card reader by a merchant is then sent over the internet. So, just like when you are at home sending credit card information over the internet, when you go to the store your credit card information is also being sent over the internet. The sophisticated criminals spend much more time going after information being collected by retailers in stores than the information being collected directly from you over the internet because the data that is collected at stores is more useful and there is a lot more of it to steal. Stores are in the process of upgrading their systems to adhere to a new set of standards to protect the information collected from the magnetic strip on your credit card, as is described in an overview by Visa.

When it comes to sharing your credit card information over the phone, you have to make sure you are dealing with a legitimate company and an ethical person at the other end of the line. Just like our earlier warning to never respond for a request of sensitive information by email, you should never respond to a request for sensitive data when you receive a phone call. You can help ensure you are dealing with a legitimate company if you are the one making the phone call.

In addition, you will often hear a recording at the beginning of the call that your conversation will be recorded for training purposes. These recordings are sometimes sent to 3rd parties to be reviewed. Again, you have to rely on the 3rd party's ability to protect their computer systems and your sensitive credit card information provided in the phone recordings.

However, do not get scared by all of these details. Should you be one of the unfortunate to have your credit card information stolen and then used fraudulently, the major credit card networks offer 100% coverage, as long as you notify them as soon as you are aware of the fraud. You can review the Zero Liability policies for Visa, MasterCard, American Express and Discover Card.

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Debit Cards versus Credit Cards

Credit cards provide a greater level of protection than debit cards. When you use your credit card, you are basically using the credit card company's money. As you just read in the previous section, the major credit card networks all provide Zero Liability policies so that you are not responsible to pay for any fraudulent charges made on your card. However, when you use a debit card, the thieves are taking money directly out of your bank account. Chances are, you will not find out that your debit card number has been stolen until someone has already taken your money. Now, you will need to work to get your money back even if your debit card provides a Zero Liability policy. Many transactions (generally those where a PIN number is used) do not qualify for the Zero Liability policy. As a result, your losses are then limited to guidelines as explained by the Federal Trade Commission (FTC) and quoted as follows:

"For example, if you report the loss within two business days after you realize your card is missing, you will not be responsible for more than $50 for unauthorized use. However, if you don't report the loss within two business days after you discover the loss, you could lose up to $500 because of an unauthorized transfer. You also risk unlimited loss if you fail to report an unauthorized transfer within 60 days after your bank statement containing unauthorized use is mailed to you. That means you could lose all the money in your bank account and the unused portion of your line of credit established for overdrafts. However, for unauthorized transfers involving only your debit card number (not the loss of the card), you are liable only for transfers that occur after 60 days following the mailing of your bank statement containing the unauthorized use and before you report the loss."

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Why Does the News Present Such Scary Headlines?

Do you remember the New York Times example noted earlier? The headline may have led you to believe that it was referring to the online theft of credit card information. Instead, it refers to credit card information, primarily stolen from store computer systems, being sold on the internet. This credit card information was primarily stolen at stores that had not yet upgraded to the new standards noted earlier. The most well known example is the theft of information from The TJX Companies, which owns T.J. Max and Marshalls.

Other headlines deal with information that is stolen from people's computers, whether they use the internet for shopping or not. There are two common methods:

  1. Phishing - Never respond to an email that requests your bank account or credit card number. In addition, never respond to an email that asks for your password or pin number. Even if the email looks like it came from your bank, the government, or the Better Business Bureau, it didn't. Sophisticated criminals will create emails that impersonate the look and feel of these organizations. However, no reputable organization or business will ever ask for this information in an email. If the email asks you to click on a link to go online and enter this information, don't do it.
    1. If you receive an email from a merchant telling you about a great deal, do not trust it, unless you previously signed up to receive that type of email. The criminals send out unsolicited email (SPAM) trying to get you to click on a link to a fake web site where they will try to collect your credit card information. This is just like the example noted above for fake bank and government email.
    2. Despite all of the media attention on this issue, as of August 2007, a Consumer Reports survey found 8% of people using the internet still fall for this scam.
  2. Accessing unsecured computers over the internet - If you do not use the security software that is often provided for free by your Internet Service Provider, thieves can easily access any file on your computer. Even if you do not use a credit card on your computer, they can likely find other information, which can then be used to steal your identity or contact your friends and family pretending to be you. It is important that your security software and internet web browser are set up to update automatically every day, or at least each time you go online. Review our article on computer security software for additional help on finding, using, and updating the necessary software. Since you can get the software you need for free, you cannot use the excuse that you are unable to afford it. Once you follow the software's set-up procedures, there is very little you need to do going forward. Thus, take the time now to ensure your computer is adequately protected.

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Look for a Web Site's Security Features Before You Enter Passwords or Credit Card Numbers

When a web site asks you to enter a password, address, credit card number, or other sensitive information:

  1. Make sure the address, in the address bar on the web page where you are asked to enter information, has https instead of http. The 's' in https represents a 'secured' web page using technology called Secure Socket Layer (SSL).
  2. Make sure you see an image of a lock on the bottom of your web browser. For those who use web browser software from Firefox and Opera, the lock shows up in your Address Bar. For Safari users, the lock shows up in the top right corner near the close button.
Most importantly, only do business online with companies you trust. This is why only lists stores you have come to trust at your local mall and shopping center. To see examples of the security features above and to learn more about shopping online, read Visa's article titled Online Shopping Protection.

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If you are Still Skeptical, Consider Getting a Separate Credit Card for Online Purchases

There is nothing wrong with taking your time to get comfortable with shopping on the internet. It often takes time to adjust to new things. Once you get used to it, you will often wonder how you ever lived without it. For help on becoming more comfortable using the internet, read our easy-to-understand tutorials. Once you become more comfortable using your computer and browsing the internet, consider these suggestions to gain comfort in using your credit card online:

  1. Get a virtual account number. To help overcome people's fears of using their credit card online, some credit card companies offer the ability to obtain a temporary account number. This account number is associated with your standard credit card but can only be used once online. The transaction will show up on your regular statement with all of your other credit card purchases. To learn more about this, call your credit card company or visit their web site and type in 'virtual account number' in the search field.
  2. Sign up for a new credit card. Instead of using your current credit cards, sign up for a new card and use it for purchases you make on the internet.

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Check Your Credit Report Three Times per Year for Free

The Federal Government put into law the Fair and Accurate Credit Transactions Act (FACT Act). This Act requires each of the three main consumer credit reporting agencies (TransUnion, Experian, and EQUIFAX) to provide you a free copy of your credit report every 12 months upon request. These companies set up a web site at for consumers to make their requests. You will see advertisements for other web sites with similar names that offer free credit reports, but it is safest to use the one created by these three agencies.

We recommend that every 4 months, you request a free credit report from one of the three reporting agencies. As an example, you might select TransUnion in April, Experian in August, and EQUIFAX in December. The following year, you can once again select TransUnion in April, since 12 months would have passed since the last time you requested a report from them. This way, you can obtain a free report every 4 months to keep a close eye on the activity being posted to your account.

When you follow the directions to obtain a free credit report, you will reach a point where you will be asked if you want to obtain your credit score for a small fee. This is optional, and not required to obtain your full credit report.

When you obtain your report, you will want to make sure the credit reporting companies have the correct spelling of your name, address, and only show a list of credit cards and loans that you have opened. You will also see older accounts that you may have since closed. You want to make sure that you recognize all of the listed items. If not, it is possible the credit reporting company made a mistake and mixed you up with someone with a similar name or social security number. It is also possible someone has stolen your identity and is opening credit using your good name. You need to address anything you do not recognize immediately. You will find instructions on your credit report that explains how you can inform them about these errors or possible fraud. So, don't put it off. Start today!

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Help Others & Good Luck

That ends this lesson on shopping safely online. In summary, it is arguably safer to use your credit card online than it is in person or over the phone. However, you must ensure you are taking the proper precautions when using the internet, whether you use it for shopping or not.

We also recommend you review these other security related lessons:

You may also want to check out our Internet Help for Beginners tutorial or our lessons for Experienced Users to improve your internet experience.

Our goal is to make you comfortable using the ever expanding internet. We especially want to reach out to online beginners and let them know it is not too late to get started. As more services, especially free ones, move online, we believe it is important that everyone learn the basics for navigating the internet. Think of a family member or friend who may find this web site helpful and forward it to them today. We wish you Good Luck and an Enjoyable Journey on the Internet. provides easy access to trusted retailers. We keep things simple for you by only listing stores with a long history of name recognition. We would like to be your one stop source for online shopping with stores like Macy's, Target, Walmart, and Best Buy. Thank You and Best Wishes.

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