You can be very careful when shopping but you will still be at risk. Each time you hand your credit card to someone or transmit your credit card number over the Internet, you're putting yourself at risk. The Privacy Rights Clearing House tracks data breaches, reporting publicly on incidents of merchants and vendors exposing your private data to identity thieves. Millions of consumers are put at risk because of data breaches each year.
And during the holiday season, you're at even greater risk. No longer are consumers forced to wait in gargantuan lines to get deals on Black Friday. The Internet has become a safe-haven of those who don't like crowds, but still want to get in on the deals.
Unfortunately, this increased activity also means there is a flurry of scams waiting to trap unsuspecting consumers. Identity theft will rise during this holiday season not only because of an increased volume of transactions, but also because more people are shopping online than ever before.
If you talk to people about their online shopping habits, you often find them at one of the far ends of a spectrum. On the one end are people who are deathly afraid of doing any transactions online and wouldn't use their credit card over the Internet even if you paid them. On the other end are those who are almost fearless when it comes to online shopping. Throw up a legitimate looking website, and they're all too happy to enter their credit card number and other personal information.
Neither of these approaches is correct. There are lots of reputable merchants on the Internet, so it's not necessary to avoid online shopping at all costs. On the other hand, there are also plenty of scams waiting to trap consumers, so a healthy dose of skepticism is in order. The key to remember is that the more information you divulge online, the greater your risk of identity theft. You, the consumer, need to balance the convenience of sharing your information when shopping online, with the inherent value of maintaining your privacy.
Scott Mitic of TrustedID, a company that provides identity theft solutions to consumers, says we can engage in some very effective (and relatively simple) activities to help protect our identities online during the holiday shopping season. First, consumers should use one credit card for all their online purchases in order to limit their exposure. This way, if your number is stolen, you have only one credit card company to deal with and only one credit card to cancel.
Do not use a debit card for your online transactions. Credit cards generally have better terms in place to protect you if your number is stolen, and you don't risk having your bank account drained by a thief. If your debit card number is stolen and your account emptied, you'll have to fight to get your money back, and in the meantime your bills may go unpaid. If a credit card number is stolen, you'll simply not pay the fraudulent charges while your credit card company is investigating.
Check to see if your credit card company offers the option of generating a secure, unique number for each online transaction. This number is tied to your actual credit card number, but the merchant will only see the unique number, not your actual credit card number. This will negate the need to cancel your credit card if your information is stolen and may help the credit card company track figure out exactly who stole your data.
When you're buying on line, make sure the page you're entering your personal information intro starts with "https://". The "s" is the important part of that web page, as it indicates that you're using a secure site to transmit data.
Finally, be careful not to fall victim to "phishing" sites, which look like legitimate online merchants, but are really set up by hackers who want to steal your data. This one is more difficult to follow than the other tips, because many fake sites look exactly like the real sites they're trying to impersonate. And if you're online searching for a unique gift, you might only be able to find it at a little-known website of which you can't possibly determine the legitimacy.
When shopping online at merchants you haven't used before, take a few steps to hopefully avoid a phishing scam. Look for actual contact information on the site, and call them. Scammers aren't known for answering their phone or questions about their "company." Use a search engine to look for third-party information and complaints about the site or merchant. Check the Better Business Bureau to see if they have a record of the company and whether complaints have been filed. Finally, consider using a product like McAfee SiteAdvisor, which works with your Internet browser to help detect fake sites and alert you to the risk.
Even these simple steps can greatly reduce your exposure to the risk of identity theft when you're shopping on Black Friday and the rest of the holiday season.
Tracy L. Coenen, CPA, MBA, CFE is a fraud examiner and forensic accountant who investigates corporate fraud and consumers scams, and is the author of Essentials of Corporate Fraud and Expert Fraud Investigation: A Step-by-Step Guide.
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