The safety of online shopping is determined by several factors:
- Honesty. Any merchant, online or offline, could steal your credit card and use it to buy things. Know the reputation of the company you are dealing with. A google search for the company may turn up horror stories — or good experiences.
- Connection security. Make sure you see the “lock” icon in the lower left or lower right corner of your web browser, OUTSIDE the web page itself. This indicates that the connection itself is encrypted.
- Data center security. Your credit card might or might not be kept encrypted and/or promptly deleted after use on the merchant’s computer systems. Again, know the reputation of the company you are dealing with.
Fortunately, there are several tools you can use to protect yourself:
- Limits on consumer liability. In the United States, most credit cards carry a $50 maximum on your responsibility for fraud, as long as you report it as soon as you discover it. This makes credit card shopping reasonably safe. READ the terms and conditions of YOUR card to be sure of what YOUR liability limit may be.
- Secure sites. As mentioned above, the “lock” icon means that it is nearly impossible for your credit card number to be stolen “in transit” across the Internet.
- Third-party payment companies. Companies like PayPal provide a way to purchase something by credit card without actually giving your credit card number to the merchant. Instead, PayPal handles the finances, and gives the money to the merchant after collecting a small fee. As a large financial services company, PayPal is strongly motivated to keep your information secure and avoid or quickly correct any security problems that do occur. PayPal is probably your best option for paying individuals and small companies without an established reputation.