5 Ways to Protect Yourself From Credit Fraud When Shopping Online
More people than ever are shopping online. In the third quarter of 2018, internet purchases accounted for about 10% of all consumer retail spending, according to the U.S. Census Bureau. But with the rise of online shopping comes a rise in scams that aim to gain access to your personal data, including your credit card information.
Credit fraud is a broad term that describes any situation in which someone takes control of your credit accounts for their personal gain. This could involve making a purchase with your credit card, withdrawing money from your account or even transferring funds. Identity theft is a type of credit fraud in which a scammer uses your personal data to open fraudulent credit accounts.
Both these scenarios can have a negative impact on your financial profile. And the risk is widespread: In 2017, identity fraud affected 16.7 million U.S. consumers, according to a Javelin Strategy & Research study.
You will generally not be held liable for credit card charges that you did not authorize if you report them quickly. But if someone uses your debit card to drain your accounts, it can be difficult to recover that money. And becoming a victim of online identity theft often causes a drop in your credit score.
Recovering from identity theft can be a time-consuming and complicated process. That’s why it’s important to monitor your credit score regularly. Sometimes, an unexplained drop in a credit score is a first indication of fraudulent activity.
Below are some steps you can take to minimize your chances of credit fraud when shopping online.
5 ways to protect yourself from credit fraud when shopping online
Strengthen your passwords
Using unusual, complex passwords makes it harder for scammers to access your online accounts. You should maintain a unique username and password for each of your online accounts. This way, if a data breach occurs on one site, your data can’t be used to access your other online accounts. Change your passwords regularly, and also consider enabling two-factor authentication. Two-factor authentication takes password security a step further by requiring your password and an additional piece of information to log into your account, such as a code texted to your phone or a number generated by an app. You can also use a password manager to create and store your usernames and passwords.
Don’t make online purchases when using a public Wi-Fi network
When you’re shopping online, use a private, password-protected Wi-Fi network. On public networks, it’s possible for scammers with ill intentions to browse your online activity. To err on the side of caution, always avoid making purchases or logging into your financial accounts when you’re on an open network.
Beware of suspicious emails — even those from friends
One common way for scammers to get your personal information is by sending you an email that appears to come from a friend or financial institution that asks for a password, address or account number. These are called phishing scams. If you encounter a suspicious email, forward it to [email protected] and any institution that was impersonated in the fraudulent email. You can also report emails to the Anti-Phishing Working Group at [email protected].
Shop at established websites only
When shopping online, it’s wise to stick to sites you know and trust. Keep in mind that unknown sites that promote offers that seem too good to be true — like 90% off a designer handbag — are most likely sites you should not trust. To ensure that a website is secure, look for HTTPS before the web address. HTTPS is the secure version of HTTP, which means all communications between your browser and the website you are visiting are protected with encryption. When in doubt, you can look up the site at the Better Business Bureau’s online directory, or you can try contacting the operators of the site to judge for yourself.
Use credit cards rather than debit cards
The federal Fair Credit Billing Act protects you against unauthorized charges, with the credit card company only allowed, under law, to hold you accountable for the first $50 in authorized purchases. It’s much harder, however, to recover charges that were made with a debit card, since funds were taken directly out of your account. On that note, it’s also smart to sign up for account alerts on all your credit and debit cards. This could notify you of suspicious charges quickly after they happen.
How to recover if you’re a victim of credit card fraud
If you find that you’re a victim of credit card fraud, there are some immediate steps to take that could help reduce the damage.
Contact the financial institution
You should immediately contact your financial institution if you suspect that someone has gained access to your credit card information. The financial institution will cancel your card and issue a new one. The institution will also look into any fraudulent activity and work on recovering unauthorized charges.
Put a fraud alert on your credit reports
Placing a fraud alert on your credit reports will make it harder for a scammer to open up more accounts in your name. Simply contact one of the three main credit bureaus: Equifax, TransUnion or Experian. Whichever bureau you contact is required to notify the other two. The alert will last for a year, and you can request a new alert when that one expires.
Consider a credit freeze
You can also reach out to the three main credit bureaus to place a freeze on your credit reports. This means that creditors that don’t have a financial relationship with you are unable to access your credit reports. If you need to open a credit account when you have a freeze on your credit report, you will be able to do so with a PIN. There is no charge to freeze and unfreeze a credit report.
The threat of credit card fraud is real and worrisome — and as online shopping continues to grow, the threat probably will as well. Luckily, there are steps you can take to reduce your chances of becoming a victim. Taking preventative action now, before fraud occurs, is always better than waiting until scammers strike.