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 credit 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.

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.



Little audience

Yet sometimes consumers don’t like the solutions banks or card companies offer either. One example: one-time use numbers. American Express launched a program offering consumers the option of disposable numbers for online shopping, but has discontinued it. “We were actually surprised to find that it was not as popular as anticipated,” says Kim Messina, spokeswoman for American Express.

Some banks issuing Visa cards offer one-time use numbers while others don’t, says Yakel. “We’ve looked at those types of products for over four years now,” he says. “While we think there is some opportunity there in providing consumer confidence, there are also some limitations in the technology.”

The major problem is that with no way to match a one-time number to a card, customers are limited in their ability to order merchandise online and later pick it up in person.

Still, some credit fans like the idea. “I still think it’s a good program for those consumers who are concerned about online card usage,” says Curtis Arnold, founder and spokesman for CardRatings.com.

“It’s an extra step, but not a huge inconvenience,” he says.

Passwords times two

The jury is still out on the use of an extra password when shopping online. Passwords are easy to use, usually adding one extra step to an online purchase. But to use a password, both the e-merchant and the consumer must be signed up for the program.

How a consumer can sign up will vary with the card and bank. Visa offers password protection to consumers directly, and the service is voluntary. MasterCard makes its service available through their participating banks. “Some banks make it an optional program,” says Rutherford. “Others implement a mandatory process.”

Certainly nothing is foolproof. But programs such as extra password protection, “are just an extra layer of protection you give yourself,” says Arnold.

The hassle factor

But why should consumers even care about theft or fraud if they’re not on the hook for charges?

Short answer: the hassle factor. If a crook takes your number and runs up a big bill, it’s an inconvenience. But if that same thief uses your account number to “become” you, opening up new charge accounts and running up bills, it can take months or years to straighten out the situation and your credit can suffer in the meantime.

“Prevention is the key, and it’s certainly less expensive than recovery,” Messina says.

Even in the case of a one-time theft of an account number protected under a zero liability policy, you have to be able to document to the credit card company’s satisfaction that you were the victim of fraud or online theft.

“You’re talking about a headache any time you become a victim of fraud,” says Arnold. “If you can avoid the headache ….”

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