How to Avoid Identity Theft While Shopping Online

How to Protect Yourself While Online Shopping

Shopping online can save time and money, making it a popular way of buying goods. But it also makes you susceptible to fraudsters, who are always finding new ways to take advantage of online shoppers.

Hackers can sometimes access private website data and obtain credit card details and other personal information. They may sell or use it to make unauthorized purchases with your credit or debit card numbers, or worse, open up other financial accounts or try to access government benefits using your identity.

While there's no way to guarantee that you won't become a victim of fraud or identity theft, follow these tips next time you shop online to help protect your identity and reduce the risks.

1. Use Strong Passwords

If you have a simple or easy-to-guess password for online accounts, fraudsters may be able to guess it, whether manually or by using hacking programs. This gives them access to whatever personal information is in there, which might include stored credit card details.

The Federal Trade Commission (FTC) recommends these strategies tips for strong passwords:

• Use at least 12 characters
• Consider using a series of random words separated by spaces (no common phrases, quotes or song lyrics)
• Or, use a mix of numbers, symbols and uppercase and lowercase letters
• Allow your browser or a third-party password manager to generate strong passwords

It's also smart to enable multifactor authentication, if available. Also choose security answers that only you would know, skipping ones like a parent's maiden or middle name that can be found in public records.

2. Pay With a Credit Card

While you may prefer to make purchases with a debit card, credit cards offer more protection for online purchases. The government only holds consumers liable up to $50 for fraudulent transactions, though most credit card issuers go beyond that with a zero-liability policy. This protects you from owing any money for these unauthorized purchases.

Debit cards aren't required to have as much protection, and your financial institution will usually require you to report fraud within a certain time period (though some issuers may extend protection). Plus, until it's resolved, the money is gone from your checking account. With credit cards, on the other hand, you don't lose money—you may just have less available credit until it's resolved.

3. Only Use Secure Public Wi-Fi

Until recently, it was considered unsafe to use public Wi-Fi—like at a coffee shop, retailer or airport—for anything sensitive. Unlike secured, encrypted home or office networks, public Wi-Fi networks could be accessed by anyone, leaving users (and their credit card details) vulnerable to interception by hackers.

Public networks now typically offer a much more secure connection with encryption, according to the FTC. However, this is only if the business has upgraded to encrypted Wi-Fi. To check if it's safe to use the network, whether on your phone or a laptop, look for a lock symbol or https (rather than http) at the start of the web address.

If the network doesn't have those signs or you can't tell, it's safer to shop at home or with a virtual private network (VPN).

4. Don't Use Unknown Retailers

It's tempting to purchase products advertised to you on social media, or buying a specific item from the cheapest online retailer Google finds. While social media platforms try to root out fraud, some criminals slip through and set up legit-looking profiles or websites. If you hand over your details to a business you've never heard of, you risk receiving a low-quality or counterfeit product—or no product and a stolen identity.

Before handing over your payment information to a random website, do some due diligence to avoid shopping scams. For example, look it up on the Better Business Bureau or Google the name of the website followed by the word "reviews" or "scam" to see what's been said.

5. Review Your Credit Card Statement

While these proactive measures work wonders, sometimes even the most cautious shoppers fall victim to fraud. You can catch it early by regularly reviewing the statements for any credit cards you use for online shopping.

Scan transactions for anything you don't recognize. If you see something that makes you suspect your credit card was hacked, call your issuer immediately. They can offer additional details to help you recognize the charge, or if it's unauthorized, they can mark it as fraud and close the card or account.

6. Use a Virtual Credit Card

Some credit card issuers offer virtual cards, which allow you to use temporary numbers generated for online shopping. They're linked to your credit card account, but prevent merchants (and criminals) from seeing your real credit card number. Depending on the issuer, some virtual numbers can only be used once, while others can be used repeatedly for online shopping.

Your virtual credit card number can still be stolen if it wasn't a single-use number that's been deactivated. But because fraudsters don't receive your real card number, if the virtual number is stolen, you don't have to cancel your entire credit card account and update all of your recurring payments. You'll only have to deal with that one transaction.

What to Do if You're a Victim of Identity Theft

If you think you might have been scammed while shopping online and are an identity theft victim, take these steps to protect your identity and finances as quickly as possible.

1. Report the Identity Theft to the Federal Trade Commission

When you enter your details in the identity theft report, the FTC provides a personal recovery plan, along with an identity theft affidavit (which it calls a report) you can use if you file a police report. You can also create an account with the FTC that walks you through recovery steps and shares free resources, such as form letters.

2. Report the Crime to Local Law Enforcement

If you're unsure whether your situation should involve police, the FTC can advise you. If you do report the crime, the process varies by jurisdiction, so check with your local law enforcement agency to find out if you can report online or must go in person.

3. Contact Your Card Issuer

The sooner you inform the card's issuer of the incident, the faster they can cancel the compromised card or account. They will likely issue you a new card with different numbers. They will also do a fraud investigation and remove any fraudulent charges.

4. Place a Fraud Alert on Your Credit File

You have a right to place a fraud alert on your credit report, which asks lenders to take additional steps when opening new credit accounts. Inform just one of the three national credit bureaus (Experian, TransUnion or Equifax), and they'll inform the other two. The initial alert lasts one year, but if you want an extended fraud alert for seven years, contact each credit bureau individually and provide the FTC affidavit and police report.

5. Change Your Passwords

If you have an account on the website where your details were compromised, immediately change that password and any other accounts that use the same one. Also consider updating your password on the website for the financial institution that handles the compromised card or account.

6. Monitor Your Credit

After the incident, keep an eye on your credit reports to make sure no future unauthorized activity pops up. You can sign up to monitor your credit report—it's free with Experian—which can keep an eye out for you. Remember that it may take weeks or months for fraudulent activity to take place and show up. If you see anything you think is a result of fraud, such as a new account you didn't open or an inquiry you didn't make, you have the right to dispute the error with the credit bureau.

7. Freeze Your Credit

As a preventive measure, you have the right to freeze your credit report with each of the credit bureaus. This prevents any new lines of credit from being opened in your name. If you need to apply for a new credit card or loan, or if an employer or landlord needs to run your credit, you have to contact the bureaus and lift or thaw the freeze.

Another option is to lock your credit report, which is easier to switch on and off than a freeze. If you have an Experian paid premium membership, you can easily lock your Experian credit file with the click of a button, which is another way to protect your identity. Memberships include additional identity theft tools, such as monthly privacy scans, identity theft monitoring, fraud resolution and identity theft insurance.

The Bottom Line

Even the most careful shoppers might receive a dreaded email about a data breach or get a call from their credit card issuer about potential fraud. Unfortunately, fraudsters are always trying new tactics to steal money and identities. But by following these tips above and remaining vigilant, you'll greatly reduce your chances of falling victim.