New Products and Technology, Preventing Identity Theft

If last year's figures are any indication, more and more Americans will be doing at least some of their holiday shopping online. According to comScore, Inc., Americans spent $29.2 billion online between November 1 and December 31, 2007, up 19 percent over the previous year.  On Thanksgiving Day alone, consumers ordered $270 million in gifts before tucking into their turkey and cranberry sauce. The shopping season reached its high point on Monday, December 10, when Americans reached for their credit cards and clicked their way through $881 million in purchases.

Certainly the convenience of ordering online is appealing—as is the ability to track down the items at great prices and have them delivered directly to your door, often without shipping charges or tax. The risk you run is identity theft—when your personal financial information falls into the hands of people who would like nothing better than to max out your credit card and empty your savings account.

In most cases, the risk you run when purchasing online is minimal, especially if you shop with well-known retailers—but given the consequences, it is certainly worthwhile to take the following precautions:

  • Make sure the Web site has a physical presence. Even retailers who operate exclusively online should have an office. Reliable companies should post their business address and a customer service telephone number on their Web sites.
  • Read the merchant's privacy policy. You can find out, for instance, if the merchant intends to share your information with a third party or affiliate company—and if you can expect these companies to market to you.
  • Look for a seal of approval. Online merchants who are members of a seal-of-approval program agree to voluntary guidelines for privacy-related practices. Organizations issuing seals of approval include TRUSTe, VeriSign, and BBBOnLine.
  • Make sure your data is encrypted. Encryption technology scrambles information as it moves from your computer to the retailer's server. Look at the URL displayed in your browser when you make the transaction. You should see the prefix https:// rather than just http://. You can also look at the bottom of your browser for a closed padlock symbol.
  • Use secured payment. When you pay through Google Checkout and PayPal, you don't have to enter your credit card information for each purchase, limiting its availability on the Web.
  • Don't give anything away. Don't provide any optional information that is not required to process your order. This information can lead to spam or telephone solicitations. Never under any circumstances give your social security number away.

Most of all, use your common sense. If the claims retailers make about their merchandise seem exaggerated, if their prices are preposterously low, if their spelling or grammar is subpar, move on. One great thing about shopping on the Internet is that there is always another merchant stocking the merchandise you're looking for.