Shopping Online: How To Stay Safe Part I – Use Protection

In the first post of this series, I made it clear that shopping online is generally a safe thing to do. However, that doesn’t mean that there aren’t scammers out there on the internet and that it isn’t possible for something unexpected to happen to you. In the offline world people are still scammed all the time and whenever you shop at a retail store they could easily steal your credit card number or skim your debit card PIN and clone its magnetic strip. Not to mention if somebody hacks a large corporation’s database of credit card numbers like what happened in 2007 with TJ Max (the owner of Winners).

These things don’t happen often, but they do happen, both online and offline, so it is best to take a few extra precautions to protect yourself wherever possible. Here are some suggestions that are easy to act on and that will increase your safety level substantially when shopping online:

Use A Good Credit Card With Fraud Protection

The pillar of any online transaction is having a good credit card with $0 fraud protection so that you won’t be held liable if the wrong person gets a hold of your credit card information or if the store you are buying from doesn’t deliver. The key here is to monitor your statement monthly and look for any suspicious transactions to make sure that you aren’t being charged for anything you didn’t buy. A quick call to your credit card company should allow them to investigate the charge and refund it back to you if they find that it is fraudulent.

You can also contact them if the online store you made a purchase from doesn’t deliver the product you purchased from them. You should always contact the vendor first to follow up and try to resolve any problems, but if that fails then your credit card company should be able to charge them back for the purchase and refund your money.

If you are the extra cautious type, then you can take additional steps to ensure you will be protected:

• Reserve a single credit card with a low limit, say $500, for all your online shopping to make sure that no large fraudulent purchases could possibly get through.
• Purchase prepaid credit cards to use when shopping online.
  • You may need to contact the prepaid card issuer to make sure the card will work for online purchases because your personal billing information won’t be on file with them. Billing information is usually verified during the checkout process and the transaction may fail if it can’t be found on the prepaid credit card.
  • These cards are now available almost everywhere gift cards are sold (gift card malls) as well as at some banks.
• Use a credit card that allows you to set up additional single use credit card numbers.
  • These are also known as virtual credit card numbers.
  • Doing this prevents the store from ever having your real credit card number because the number you gave them will be deactivated after the purchase is complete.
  • Unfortunately, no credit card issuers in Canada have really caught on to doing this even though it has been available in the USA for years. Hopefully soon!
    • Consult this thread at RedFlagDeals for more details and alternatives.

Use An Online Payment Service

Another safe way of making purchases online is to use an online payment service like Paypal or Google Checkout to complete the transaction. The way it works is that you register your credit card or your bank account with the service so that there is only one company that has access to your funds and then you use the service to make your payments when shopping online.

The downside is that not all stores accept payments from these services. Paypal has been around for years and is actually owned by Ebay so it is pretty much an online standard and is accepted at a long list of online stores. The bigger retailers that also have large bricks and mortar stores tend to shy away from payment services altogether, but when shopping at those sites you know your payment information should be well protected anyway.

The security of these services is actually far superiour to any online retailer out there because the primary and only service they provide is payment processing. Naturally, this means that security is their top priority and they will protect your financial information using multiple layers of security and account monitoring. Paypal even clearly states on their website that the servers which store credit card and bank card numbers are not directly connected to the internet so they can’t possibly be hacked from the outside.

Make Sure Your Computer Is Protected

The other big thing you can do to protect yourself is to make sure your computer and web browser are as protected as possible when shopping online. That way you know any financial information or personal data that you transmit across the internet won’t be intercepted by anybody with malicious intent. Here are a few steps you can take to safeguard your computer:

Ensure The Website Is Using Encryption

Almost every online store uses encryption to send and receive financial information between your computer and their servers. However, this only happens at the very last stage when you either sign into your account or enter your credit card information. So once you arrive at the checkout screen there are two things you should do:

• Check for the added ‘s’ at the end of https in the website address at the top of your browser.
  • The ‘s’ stands for secure and means that the website is using Secure Socket Layer (SSL) encryption for the transaction.
• Look for the small closed padlock icon in your web browser.
  • This padlock is another visual indication that the website is encrypted and that your data is safe.
  • If the padlock is open, has an line through it, or is missing entirely, then the connection is not secure and you should proceed with caution.
• Finding the padlock in popular web browsers:
  • Internet Explorer – located in the address bar to the right of the URL. The background of the URL bar also becomes green when the site is secure.
  • Firefox – located in the bottom right hand corner in the status bar. A green security certificate indicator also appears to the left of the URL when the site is secure.
  • Chrome – located in the address bar to the left of the URL. A green security certificate indicator also appears to the right of the padlock and to the left of the URL when the site is secure.
  • Safari – a very small padlock appears on the far right side of the address bar.

Use A FREE Antivirus Program

Making sure your computer is protected from viruses and trojans that can sit idle on your computer while monitoring your keystrokes and other activity is essential to staying safe while shopping online. Being smart when surfing online by not downloading pirated files and media, avoiding file sharing, and staying away from shady websites is often all the protection you need. However, it is definitely a good idea to have an antivirus program installed to watch your back and ensure that your computer remains healthy.

These days you don’t even need to pay an annual subscription fee to the likes of Norton of McAfee to have your computer well protected from viruses. There are several antivirus companies now offering free antivirus software to home users and only charge their corporate customers for their usage. I spent a significant amount of time researching these programs a while back including detection rates, number of false positives, and system resource usage. I may write a separate post on the subject sometime in the future, but for now here are the free antivirus programs that I recommend (install only one at a time):

• Microsoft Security Essentials
• Avast!
• Avira

Use A Protected Internet Connection

You probably aren’t going to want to do the the bulk of your online shopping while sipping a coffee at your local Starbucks for two reasons: you would be using a wireless connection in a crowded space, and public WiFi hotspots are typically unencrypted so it is feasible that a nearby person could monitor your outgoing and incoming data.

To protect yourself, you should stick to doing online shopping either from home or from somewhere else that has a trusted internet connection. If you do decide to shop while connected to the internet wirelessly from home, make sure that your wireless connection is protected by encryption. It is still slightly more accessible than using a hard-wired connection but the chances of someone being close enough to intercept your wireless data and being able to break the encryption are practically nil.

Use A Firewall

Firewalls are something I’m not particularly big on using myself because they often need to have exceptions configured for all your installed software to work properly. However, they do provide an extra layer of protection by monitoring incoming and outgoing data and blocking various requests that are deemed to be a possible threat.

There are two types of firewalls you can consider using: software based firewalls and hardware firewalls. Most operating systems come with a software firewall built in these days and all you have to do is make sure that it is switched on. In windows, simply do a search for “Windows Firewall” and you should be able to tell from there if it is on. Windows will also periodically warn you, via popup notification, if the firewall is turned off for your safety. Many antivirus suites, usually the premium editions, come with software firewalls as well so that is another option for you to consider.

I prefer to use a hardware firewall (router) myself because it interferes less with the computer and won’t be using system resources to do its work. Most good routers come with a firewall built in so, if you want one, just do a little research to see if your existing router has one and, if not, consider upgrading your router to a model that has one included. Even if a router doesn’t have a full firewall built in, it still does a good job of shielding you from being directly connected to the internet and will stop many malicious attacks.

Keep You Software Up To Date

Both your operating system and your internet browser should always be as up to date as possible. The reason for this is because new security vulnerabilities are discovered all the time and they are closed as soon as they are found in the latest release of the software. Windows operating systems will update themselves as long as you have automatic updates turned on (this is the default), so you don’t really need to think about that. Internet browsers often check for updates for you, but you actually have to agree to install the update so make sure that you do whenever you are prompted.

If you’re that one person who is still browsing the internet using a Windows XP Service Pack 1 computer with Internet Explorer 6, then it is definitely time to upgrade before you start shopping online!

This is the 2nd post in our series about shopping online. What do you do to protect yourself online? Have you ever had any of your financial or personal information compromised?