The dangers of e-commerce and shopping online

Are you a compulsive online shopper? Are you a deal finder?

Look, read, and get a good feel when you've found a great deal:

Shopping online is making up a larger percent of global shopping expenditures every year. It can be extremely economical and convenient: it's like a 24/7 flea market for bargain shoppers.

While shopping online maybe more convenient than shopping it a store, it does come with some important precautions. The primary issue is that you are not actually there in the first person to view, hold, and touch the item that is being purchased. The second important issue is that the person who you are buying or selling to is not physically in front of you and never will be. These two concerns necessitate some important precautions so neither party gets taken advantage of.

If you shop online, here is what you need to know:

1) Getting what you expect out of the transaction:

Look: Get a good idea at exactly what you are buying if an image is available.
Read: the product description closely, including the fine print. Many times the "specs" aren't what you expected when the price is too good. Also, keep an eye out for words like "refurbished," and "vintage." While these descriptions may mean that the item is a collectible, they often describe or are a sales tactic to sell an item that is in mediocre condition (that's to say, beyond "used"). Also remember that new, brand name items with bargain prices that are too low are much more likely to be counterfeits than the same items at just cheaper than retail price. Just keep in mind that if it's too good to be true, it probably is.
Get a good feel: for whom you're dealing with. While this is very important for auctions, it is still a great idea in general shopping with online companies. Just about anyone can set up a seller profile online under almost any name. This is a case where your intuition (if you have it) may really help out. Ensure that the seller is reputable (view customer feedback if available), has a physical address, and a contact phone number. Emails are harder to trace when you need to find someone because you have a standard customer issue.
If you're playing it safe, always purchase from the more established company or sellers. Longevity and track records speak for themselves.
Another thing to keep an eye out for is the fine print: be certain to view and understand the return or exchange policies. Remember that if your vendor is not the site company (for example, a seller profile on Amazon.com), the company's exchange policies are often not the seller's exchange policies. That information should be on the seller website or available on request.
Factor in shipping and handling to your cost. An item that costs slightly less than at your local store will end up costing you more once you factor in shipping and handling. And also consider: would you pay slightly more for something that you're certain you want? Well, if the item can be bought from a store, when it is physically in front of you, it is easier to be certain that you want it. If your item is found online, you just don't always have that certainty. [A whole other frugal strategy (that I often use) is to find what you'd like in stores, then go find that same model online].
Use credit card or charge card for the transaction. This maximizes consumer protection because the vast majority of credit card companies will only hold the cardholder accountable for the first $50 USD of unauthorized use (due to the Fair Credit Billing Act). Additionally, many large online shopping sites will not hold their customers liable for any fraudulently purchased products. The most common forms of online payment are:
- credit card
- debit card
- online payment services
- money order
- escrow service (for large transactions)
- personal check
- cashier's check
Print and save your receipts from all of your transactions, but especially your online transactions.
Do not send cash under any circumstances. If a seller/vendor requires cash, there is a strong possibility that it's fraudulent (cash is just too hard to trace).
The closer you can do business, the better. Especially if it's a website like Craigslist or Ebay. If you know the physical location of the vendor, that's empowering. There will be fewer issues (because there are fewer variables, i.e. fewer changes of hands).

2) Ensure your privacy and security:

Use a strong password. Always. This is extra important when you have an account you can buy stuff with!
Great rule of thumb: Only give your financial information when you initiate the transaction. Never email your financial information. Email is not a secure method of transmitting financial information like your credit card, checking account, or Social Security number. Legitimate companies simply don't ask for this information via email.
Only consider a popup valid if it is in direct response to a click that you just have initiated. If you get an email or pop-up message while you're browsing that asks for financial information (even if you recognize the company), don't reply or click on the link in the message.
When you do give any personal information, including financial information, be certain the website is secure. Look for indicators that the site is secure, like a lock icon on the browser's status bar or a URL for a website that begins "https :" (the "s" stands for "secure").
Also in the fine print: will the vendor sell your information to any third-party direct marketers or data brokers?

A Closer Look: Online Shopping Security Seals

What do they really mean?

Online seals are typically on shopping carts and checkout areas. Seals are typically provided by companies that sell them to vendors as a product. The major companies in this field are Truste, BBBonline, and Verisign. How much do they cost vendors: "Both Truste and BBBOnLine charge an annual fee based on your yearly revenue (source). With Truste, companies making less than $5 million are charged $599, while those grossing over $2 billion must pay $12,999. The pain is less at the BBB: Small firms are charged $200, while those grossing over $2 billion pay $7,000."

So they're making a lot of money from that. And what kinds of security checks actually get done? Well, seal companies require that vendors:

1) meet "seal standards"- whatever that means

2) post privacy policies that meet standards

3) provide customers a way of opting out of direct marketing and other selling of their information to third parties

4) provide customers a way to file complaints

5) provide customers a way to access their information

Know your rights

If you pay by credit or charge card online, your transaction will be protected by the Fair Credit Billing Act. Under this law, you have the right to dispute charges under certain circumstances and temporarily withhold payment while the creditor is investigating them. In the event of unauthorized use of your credit or charge card, you generally would be held liable only for the first $50 in charges.

Some companies offer an online shopping guarantee that ensures you will not be held responsible for any unauthorized charges made online, and some cards may provide additional warranty, return, and/or purchase protection benefits.

A Federal Trade Commission (FTC) rule requires sellers to ship items as promised or within 30 days after the order date if no specific date is promised.

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