Perishable credit card numbers take the fear out of Web shopping

And those fears are justified.

"There has been a lot of fraud on the Internet," says Avivah Litan, vice president and research director at GartnerG2. "Seven percent of online consumers surveyed in September 2002 were victims of credit card fraud."

And it's not so much the damage to their wallets that worries folks about online shopping -- card issuers promise zero liability for any unauthorized online purchases -- but the potential damage to their good names.

Swiping a credit card number and other personal information may be all an online thief needs to steal your identity. And sorting out the mess a thief makes of your credit report falls squarely on a consumer's shoulders. One percent of online consumers were victims of identity theft in 2002, according to the GartnerG2 survey.

"The anonymity of the Internet works in favor of the crook," Trosclair says. "The speed of the Internet works in favor of the crook."

When virtual credit card numbers aren't good
Making online purchases with a single-use card number gives you an added layer of protection. But there are also plenty of instances when paying with a virtual card number wouldn't be a good idea.

You can't pick up theater tickets with a virtual credit card. And you can't confirm airline, hotel or rental car reservations with a credit card number that doesn't exist off the Web.

Paying recurring expenses, such as monthly phone or cable bills, with a credit card number that expires every few weeks would be a hassle. Pre-ordering unreleased books, compact discs, videos and DVDs off the Web is out as well. The reason? Your virtual card number could expire before the merchandise is available for purchase.

Discover takes a different tack with its single-use credit card program. The expiration date on its randomly generated card numbers match the expiration date on the customer's actual Discover Card.

You could use a single-use card number from Discover to pay monthly bills or pre-order merchandise without any trouble.

A virtual card number from Discover can only be used at a single online merchant, but you don't have the added peace of mind of knowing that after a few weeks your virtual credit card number will expire.

"It's not really a security benefit," Litan says. "It's convenience."

Common sense fraud-avoidance tips
With or without a virtual credit card number, you can take steps to minimize online fraud by using some old fashioned common sense while shopping:

Find out if the Web site you are visiting has a privacy policy. The same thing goes for your card issuer. Know how your personal information will be handled.

Make sure your transactions are handled through a secure or encrypted mode. Most merchants use SSL, the secure socket layer protocol. You will know you're on a secure site if the Web page on which you conduct your transaction begins with "https:" instead of the usual "http:".

Print out privacy policies, warranties, price guarantees and other important information.

If you're shopping with a merchant for the first time, look for the Trust-e symbol or a Better Business Bureau online seal, which indicate the seller has been independently audited and deemed trustworthy.

Monitor your credit card account frequently. Keep records of all online transactions. If you find a suspicious transaction on your bill, contact your credit card company immediately.

Steer clear of spam e-mail offers.

"Don't even respond," Litan says. "Delete them."

Buy a shredder and destroy bills, pre-approved credit offers and other documents with personal information before throwing them out. Not all identity thieves are high-tech hackers. Some use low-tech methods, such as dumpster diving, to swipe personal information.