DO: Use the right payment method.
For online purchases, an added layer of protection is best. Most major credit cards have excellent consumer fraud protection and quick dispute resolution and those should be your first choice for funding online payments. It’s often a good idea to have a credit card you use ONLY for online purchases, should something happen and the card needs to be shut down and replaced, you are not out a card you use for everyday life. For added protection, credit card issuers can give you a one-time-use (or “virtual”) credit card number. A stolen virtual card number is less likely to cause a ripple effect of issues within your account.
DON’T: Use your debit card.
If at all possible, avoid using a debit card linked directly to your bank account. Even if you are vigilant and spot an illegal transaction right away, those cash funds are gone from your account until your bank has time to process the dispute. And while both debit and credit cards give consumers the right to dispute errors, only credit cards give you the legal right to reverse a payment when the goods are not delivered as agreed.
If you cannot or do not want use a credit card, consider getting a prepaid cash card for your online purchases to create a layer of insulation for your checking account. Or use your debit card in conjunction with an online payment processor that offers additional protection.
DO: Use the right payment platform
Most online shopping platforms have preferred payment platforms: eBay, Amazon and Etsy for example all have their own services Generally you will receive the most protections by using their preferred payment provider.
When it doubt, use PayPal.
PayPal offers one of the more robust purchase protection programs that covers both buyers and sellers in online purchases. PayPal is in some ways safer than paying directly with your credit card because you do not have to reveal your billing address to the merchant. PayPal is one of the better options if you want to use your bank account to make online purchases instead of a credit card.
DON’T: Use or download new payment options without doing your research first
There are dozens of consumer and peer to peer payment apps available, with new ones coming out all the time. Just because your buddy or the guy on Facebook selling that pool table you want says “Hey just send me money with this!”, doesn’t make it a good idea. Whenever possible, use a known and trusted payment processor like PayPal or a peer to peer service provided by your bank before using a “new and shiny” service.
Generally, you should only use peer-to-peer apps like Venmo when dealing with people you personally know. It is generally more difficult to get your money back using these apps than with online processors like PayPal. Also make sure you utilize all the security features with these apps to better protect your account from fraud.
Be wary of cryptocurrency like bitcoin, which some online sellers allow. Under current laws, there are not error resolution rights or limits on losses and transactions are irreversible.
DO: Use common sense and practice good internet “hygiene”.
Always practice good internet hygiene—if you are going to use your phone or computer to make payments, thereby at some point typing in your account information, make sure that device stays clean and clear of spyware or viruses that might capture that data. Use your common sense and go with your gut: If someone suggests you pay by gift card or wiring money, don’t do it-that’s a red flag for fraud. If the checkout process on the seller’s page is missing the “https” in the address or seems ill-made, do some more research for other payment options (or other sellers). Always stay on top of debits from your accounts and if one is not familiar, ask your bank or credit card processor for more information. And if something just doesn’t “feel right”, it’s ok to go with your gut, walk away from the purchase and head to the store to buy in-person.