smart spending

6 tips for safe online shopping

Another option is making purchases through a third-party escrow service such as PayPal. Paypal Buyer Protection covers qualifying eBay purchases for up to $1,000 at no additional cost to buyers, helping to guarantee your purchase.

After any sale, be sure to print and save all of your receipts and e-mail confirmations in case of a dispute.

Credit shy?
If you are reluctant to give out your credit card number over the Internet, you have alternatives. Some card companies such as Discover Card, MBNA, Bank of America and Citi offer a secure online account number service -- a virtual credit card or virtual account number.

Discover Card says since they first offered secure online account numbers they've "had no incidences of credit card fraud or identity theft in situations where hacking has occurred."

By providing merchants with a special credit card number instead of your real number, your actual Discover account number is never exposed to scammers. Check with your credit card company to see if they offer this type of security feature.

Another security feature on the horizon is a one-time-use password token. The technology has been developed, but it's not in widespread use yet. To protect yourself, be wise in your choice of passwords. Use a combination of letters and numbers difficult to guess, says Chris Young, senior vice president and general manager of the consumer solutions division at RSA Security, a company that has developed password tokens. Don't use a word or number someone else could figure out, such as your birthday or dog's name. Change your password frequently.

6. Suspect the suspicious.
If you're at the checkout page and the site asks for your date of birth and Social Security number, be very careful.

"This combination can give people enough information to start applying for new credit cards in your name," Branigan says. What's scarier is the ease with which driver's licenses can be purchased overseas -- they can be purchased for as little as $100. If that scares you, remember a simple rule of thumb: If anything seems suspicious, call the company and ask questions.

Also be wary of sending out credit card information via e-mail or instant messaging, says Branigan. Neither is encrypted. Copies can remain on your mail server as well as theirs. Since you can't control who's looking at your information, stick to the site's secure transaction page.

The final word
Moment of truth: Is online shopping safer than shopping offline? The experts offer a silver lining to the cautionary warnings against online identity theft and credit card fraud.

People should be aware that as long as they are dealing with reputable companies, online transactions are far more secure than the face-to-face transactions people perform every day, says Stickley.

Online transactions eliminate the middle man, such as the waiter who processes your credit card payment, so there are less people who physically see your private information.

Consumers who research companies before making purchases, watch for warning signs of fraud, use credit cards for purchases and keep receipts should be relatively safe.

"They can be absolutely as confident as physically shopping in a store," says Branigan.

-- Updated: Nov. 7, 2006

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