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When it comes to buying online, credit cards are
the only way to fly.
"The bottom line is that people feel a lot safer
(using credit cards)," says Linda Sherry, spokeswoman for Consumer
Action, a nonprofit advocacy and education group. "Much as
I advocate pay-as-you-go, when shopping online or with merchants
you don't know, a credit card is a lot safer."
But not all cards are created equal. Depending on
your card brand and the issuing bank, your plastic may offer some,
all or none of the following:
Zero liability
Upside: Offered by credit card issuers,
including Visa, MasterCard, DiscoverCard and American Express. When
someone steals your credit card and makes charges without your permission,
you are responsible for the first $50. But if your card offers "zero
liability," you aren't responsible for any amount.
Downside: Some cards require that you
adhere to certain rules, like reporting the fraud within a certain
length of time, so it pays to know how your card works.
One-time use/virtual or temporary
numbers
Upside: Offered by credit card issuers,
including Discover; also by some banks, including MBNA. You download
a piece of software from your card's site or go to the site and
login to your account and get a "disposable" number, good
for one online purchase only.
Downside: Some cards will let you use
these for recurring charges (like that monthly club membership)
for up to a year, others won't. And you can't use them to pay for
things online that you will pick up in person, such as airline tickets.
The reason: Many times merchants want to verify that you're the
person who paid for the goods, and will ask you to show the card
you used for the purchase. With a disposable number, the two won't
match.
Extra passwords
Upside: Offered by credit card issuers,
including Visa and MasterCard. Similar to the system you use when
you sign in for your e-mail. With this program, you include an extra
password, known only to you and the card company or bank, when you
buy from certain online merchants.
Downside: Not every e-tailer who accepts
the card online participates in the program. So technically, if
someone steals your number, they could still use it plenty of places
online without knowing your password.
Bottom line: Read the
fine print and choose your card carefully before you point, click
and buy.
Fraud shield
Smart consumers always reach for a credit card when they buy online
because cards offer charge-back rights and a shopper's liability
is limited to $50 in case of fraud or theft.
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| The Internet Crime
Complaint Center (IC3), a partnership between the Federal
Bureau of Investigation (FBI) and the National White Collar
Crime Center (NW3C), provides details on all types of
Internet scams. You can check its Web site for descriptions
and solutions for all kinds of problems. |
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| Have
you been a victim of a fraud or theft online? |
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Zero liability adds another layer of armor. When it
comes to shielding a consumer from online fraud or theft, "the
greatest tool is zero liability," says Michael Yakel, vice
president, emerging product management at Visa USA.
Security issues
But no matter how popular Internet shopping becomes, there are still
those who don't feel comfortable putting their private financial
information into the ether.
When MasterCard did a survey of its card holders
in 2002, 70 percent indicated that they were concerned about security
and fraud issues, says Bruce Rutherford, vice president, e-business
and emerging technologies with MasterCard International. Of those
who indicated they were worried about security, 46 percent said
they would shop online more often if security were stronger.
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Chapter 5: Using credit wisely
