Dan Butler's
TNPC Newsletter

Credit Cards on the Net and You

by Dan Butler

A recent big news story concerned a hacker who supposedly stole 300,000 credit card numbers on the Web and was holding them ransom. The story interested me for two reasons. First, as a merchant I do business over the Internet and take credit cards. I also provide order-taking solutions involving credit cards over the Internet for other people to do the same. Second, as a consumer I purchase items over the net with my own credit card. Do I worry about my card information being stolen? No, and I'll tell you why.

To start, let's talk about the security of your card on the net. Many people I know would not consider sending their credit card unencrypted through email for fear of it being stolen. Yet I've never encountered one case of an email being intercepted and the credit card number stolen.

Sure there have been anecdotal stories... "My brother knows someone whose sister's friend's brother had his credit card number stolen." That sort of thing. But I don't know of one *verifiable* instance of it happening. To be safe you should only shop on secure sites (those display the little lock on the status bar of your browser). Actually, I should say "safer" because being on a secure site does not guarantee that your data is safe. Many secure sites take your credit card information in encrypted format then turn right around and resend that same information to the store via plain, unencrypted email. It's true. So should you stop shopping on the Web?

Not at all. The hacker who claims to have grabbed all the credit card numbers managed to find a poorly designed site that actually stored all order information on the Web server. Had the orders been transmitted to the merchant encrypted or not they wouldn't have been there for someone to take in the first place. Does this mean I advocate sending all orders through email? God forbid! Rather I'm trying to get you to measure the real risks involved in shopping with a credit card on the Internet.

The reality is that a credit card offers you a great deal of protection and is your best bet for online purchases. First, in the USA you're covered under the Fair Credit Billing Act when you use a credit card. If the merchant does not perform you can dispute the charge with your credit card company. Second, if your credit card information is "stolen" you have a maximum liability of $50 and seldom does a bank even pursue that if you report any irregular charges on your account timely.

Using a credit card on the Web for ecommerce is no riskier than using it in everyday commerce at brick and mortar establishments. Always check your statement each month with care and challenge charges that you do not remember making.