Don't Use a Debit Card When Shopping Online

The movie “Gone in Sixty Seconds” showed how a professional car thief could break into, start and drive off in a stolen car in sixty seconds. If you shop online using a debit card, a stranger could steal your identity and empty your checking account in even less time.

Why? The law governing debit card transactions is much, much weaker than the law governing credit card transactions:

• Credit card liability. If you report the theft before the card is used, you have zero liability. If you report it after the card is used, it is capped at $50 per card
• Debit card liability. If you report the theft within two business days, your liability is limited to $50, and some issuers may waive that amount. However, after two business days, your liability jumps to $500. And if you don't report the loss or theft within 60 days of receiving your statement, your liability is unlimited.

Now, both Visa and MasterCard, as a matter of company policy offer some protection. Visa offers zero liability, unless the cardholder was negligent. Mastercard offers zero-liability in the event that the client has not reported two more “unauthorized events” within the past year.

If you choose to use a debit card to shop online, here are some ways to protect yourself.

• Get the seller's phone number in case you have questions or problems.
• Type the seller's name in your search engine to see if there are unfavorable reviews.
• Read the website's privacy policy to see how your personal information will be used.
• Understand the return policies.
• When entering payment information, make sure the http:// changes to https:// in the site's URL address line.
• Don't shop online unless your computer has antivirus and anti-spyware software, and a firewall.

Expert Tips to Avoid Identity Theft

Marketwatch.com has a useful article regarding the ways identity theft and computer security experts protect themselves from identity theft. “Catch Me If You Can” identity theft expert Frank Abagnale and Other Security Experts discuss their techniques for avoiding identity theft. Here is a summary of their recommendations and a few of my own:

Use a Credit Card Credit Card issuers do more to protect their customers from fraud. To protect your credit rating, pay the bill in full each month. Also, if you do use a debit card, have the merchant run it as a credit card so that you do not give up your Personal Identification Number.
Also, if you have the debit card transaction processed as a credit transaction, you may fall within some of the protections offered to credit card users.

Use a service which monitors all of your credit accounts and notifies you by e-mail whenever someone is trying to use your credit.

Shred your documents with a micro cut shredder which reduced the information to sawdust sized particles. Abagnale recommends even shredding the back pages of catalogues so that dumpster divers cannot access your retail accounts.

Opt out of creditors’ information sharing arrangements. You can do it by telephone or by signing up at http://www.optoutprescreen.com/.

Set up your main banking accounts so that they do not permit transfers to other institutions. This way should a thief get your account information, they will be unable to transfer your money. Also, monitor your accounts frequently.

If you are going to shop online, do not use links created by search engines, type the address in your browser yourself. Some of the links are created by thieves to steal your credit card information.

Don’t write checks at stores. They are insecure and thieves can obtain account numbers, routing codes, addresses and other personal information simply by copying them. Also, there are techniques for altering checks by washing them with chemicals to change their amounts. They may also be scanned and altered.

Have a two-way firewall on your computer so that it blocks information from entering your computer and makes it harder for hackers to hijack your machine and send information out.
Don’t store your passwords on your computer.

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