Online Shopping: Safer with Disposable Credit Card Numbers
January 26, 2010
Experienced Internet shoppers love purchasing online--paying is easy, and the products are delivered to your door. But statistics from online payment company PayPal show that 20% of those who abandon or fail to complete an online purchase do so because they have concerns about the security of their credit cards.
Online Shopping with Credit Cards: Safe or Silly?
Tales of high-tech hackers sneaking into company databases online to steal customers' private information (for example, your credit card account numbers or your address) cause many people to avoid making online purchases. Although these breaches of security don't happen often, they occur often enough to keep consumers wary of conducting business on the Internet--worried that the wrong person could get access to their credit cards, account numbers, or other private data.
Because of the expansion of e-commerce and the pervasiveness of the Internet, there is a lot on the line for credit card companies if these problems or fears should get out of hand. Naturally, companies are working quickly to develop updated technology to thwart the crooks and alleviate the fears of customers. The top solution? Temporary or disposable credit card transaction numbers.
Initially implemented by American Express back in September 2000, disposable transaction numbers enable shoppers to make a purchase online without giving up sensitive data. Recently, PayPal has created a solution that lets you download a free toolbar which automatically generates a one-time-only MasterCard number (Visa and Amex are not yet supported). This credit card number offers the customary security features--including the 3-digit code on the back that many sites routinely ask for.
Discover is another company that has increased its customers' security by offering their Deskshop Virtual Credit Card. Deskshop, unlike some other programs, allows the user to make multiple purchases from the same online vendor. For example, every single-use card number is unique for the particular online store that it's linked to and will not be valid if used at any other store. In addition, you could use the same number for recurring charges such as monthly bills that you choose to pay online.
Citibank offers a Virtual Account Numbers program to its consumers, and MBNA provides a similar program that it calls ShopSafe. Regardless of whether you opt to beef up your online security with disposable or temporary card numbers, you should always practice safe Internet shopping to keep your information as protected as possible. Find valuable tips for safe online use of credit cards on the PrivacyRights.com Web site.
Keeping Online Shopping Safe: Whose Responsibility?
Government agencies such as the Federal Trade Commission explain that according to federal law, your maximum liability for credit in the case of loss or theft of your credit cards is only $50 (and many card issuing firms even have "zero liability policies" for their credit cards). So why are solutions like temporary or disposable credit card numbers needed if consumers are already protected from theft?
One reason is to avoid the hassle. Having to contact your credit card company and explain the problem, fill out the required forms, and file claims can be a pain. It just makes sense to protect yourself from fraud in the first place instead of worrying about it after the fact.
Another reason is to keep down the costs for merchants who do business online. Excessive chargebacks from fraudulent purchases could increase online costs, and merchants could end up passing millions of dollars each year to customers--or card issuers could reduce perks on rewards credit cards and or cash back credit cards.
Finally, disposable numbers are not a panacea. Although temporary credit card numbers are safe to use for most purchases, companies do recommend that some online buys be made with your actual permanent cards. These purchases include those that require the buyer to present the card in order to claim the items, such as tickets for a show or your next vacation.