What's Safest: Credit Cards, Debit Cards, Cash, or Checks?

What's Safest: Credit Cards, Debit Cards, Cash, or Checks? The safest way to shop on the Internet is with a credit card. In the event something goes wrong, you are protected under the federal Fair Credit Billing Act. You have the right to dispute charges on your credit card, and you can withhold payments during a creditor investigation. When it has been determined that your credit was used without authorization, you are only responsible for the first $50 in charges. You are rarely asked to pay this charge. For more information on credit card consumer protections, see http://www.privacyrights.org/fs/fs32-paperplastic.htm#3 Make sure your credit card is a true credit card and not a debit card, a check card, or an ATM card. As with checks, a debit card exposes your bank account to thieves. Your checking account could be wiped out in minutes. Further, debit and ATM cards are not protected by federal law to the extent that credit cards are. The “Restore Online Shoppers’ Confidence Act” (P.L. 111-345) (signed December 29, 2010) makes it illegal for a company that sells goods or services online to give a consumer’s credit card number (or other financial account number) to a third-party for sales purposes. This practice is known as “data passing.” The Act prohibits a third-party seller from charging a consumer for any good or service, unless the seller (1) clearly and conspicuously discloses the material offer terms and that the third-party seller is not affiliated with the initial merchant and (2) receives express consent for the charge from the consumer. The third-party seller must obtain the full financial account number directly from the consumer. The initial online seller may not transfer a consumer’s financial account number to a third-party seller. The Act also regulates “negative option” plans. A consumer must give express, informed consent before being charged for goods or services sold online through “negative option” marketing, such as “free trials” that the consumer must cancel in order to avoid being charged. Companies that use negative option plans must (1) clearly and conspicuously disclose the material terms of the transaction before obtaining the consumer’s billing information, (2) obtain a consumer’s express consent before charging the consumer, and (3) provide a simple mechanism to stop any recurring charges. Online shopping by check leaves you vulnerable to bank fraud. And sending a cashier's check or money order doesn't give you any protection if you have problems with the purchase. Never pay for online purchases by using a money transfer service. You could be transferring cash to a fraudster. Scammers will ask consumers to send them payment using a money transfer service such as Western Union or MoneyGram because they can get your cash fast and it’s difficult to trace. Legitimate sellers normally do not ask consumers to send payment that way. Money transfer services should only be used to send money to people that you know well, not to unknown sellers of merchandise online. Watch the Consumer Federation of America’s video about this at http://www.youtube.com/watch?v=R2ylW85g1So. 7. Never Give Out Your Social Security Number Providing your Social Security number is not a requirement for placing an order at an online shopping site. There is no need for the merchant to ask for it. Giving out your Social Security number could lead to having your identity stolen. (See PRC Fact Sheet 17a, "Identity Theft: What to Do if It Happens to You".) 8. Disclose Only the Bare Facts When You Order When placing an order, there is certain information that you must provide to the web merchant such as your name and address. Often, a merchant will try to obtain more information about you. They may ask questions about your leisure lifestyle or annual income. This information is used to target you for marketing purposes. It can lead to "spam" or even direct mail and telephone solicitations. Don't answer any question you feel is not required to process your order. Often, the web site will mark which questions need to be answered with an asterisk (*). Should a company require information you are not comfortable sharing, leave the site and find a different company for the product you seek. 9. Keep Your Password Private Many online shopping sites require the shopper to log-in before placing or viewing an order. The shopper is usually required to provide a username and a password. Never reveal your password to anyone. When selecting a password, do not use commonly known information, such as your birthdate, mother's maiden name, or numbers from your driver's license or Social Security number. Do not reuse the same password for other sites, particularly sites associated with sensitive information. The best password has at least eight characters and includes numbers and letters. Read our Alert "10 Rules for Creating a Hacker Resistant Password" to help you choose a safer password.