How to avoid scams and shop safely online

Outsmart fraudsters by taking a few precautions.

Even though in-store shopping made a comeback last year, e-commerce sales still reached a whopping $266 billion in Q3 2022. While we love the convenience, there’s also a risk anytime you enter personal information online. Here are a few ways to stay safe.

Common types of fraud

According to the Federal Trade Commission consumers lost about $392 million in online shopping scams in 2021. With so many websites and online retailers to choose from, how can you be sure you’re not being scammed?

Criminals are nothing if not creative, and there are many types of fraud. According to the FBI Internet Crime Complaint Center, non-delivery and non-payment are two of the most common scams. During the 2021 holiday season alone, these scams cost consumers more than $337 million. Non-delivery is when consumers pay for goods that are never received. Non-payment is where goods are shipped, but the seller never receives payment.

Auction fraud and gift card fraud are two other popular scams. With auction fraud, scammers will misrepresent a product that they're advertising for sale through an online auction. For example, they may sell a non-existent item or fail to deliver the product after it's been purchased.

Gift card fraud happens when someone asks you to pay for something using a gift card. Gift cards are a popular form of payment because they're easy to buy, but they also have fewer protections. If someone you don’t know asks you to pay them with a gift card, it's likely a scam.

Good ways to avoid fraud

When it comes to fraud, vigilance is often the best defense. Stay informed about fraud and be on the lookout for red flags. When shopping online, only use reputable websites and check reviews before making a purchase. Pay attention to your bank and credit card statements for any unusual activity and report any suspicious charges immediately.

Using a credit card for online purchases has several advantages. If your credit card includes fraud and purchase protection, you may not be responsible for unauthorized charges. If you don’t know what protection you have, check the terms and conditions of your credit card to be sure. Additionally, credit cards are not linked to your bank account, so if your card details are compromised, your savings remain separate, and safe.

In all cases, avoid wiring money directly unless you are absolutely sure you can trust the recipient and their wire transfer details. Once the money is gone, it’s gone. So, there are few solutions if you are defrauded this way.

Protecting yourself online

When shopping online or entering any sensitive information into a website, always check the URL first. Verify that it starts with “https.” The “s” means “secure” and indicates that the site is protected via Secure Sockets Layer (SSL) protocol.

If the site starts with just “http” be more wary. It’s not a good idea to enter any financial or personal information into an unsecured site. If there are typos in the website address or it looks unusual in any way, it’s best to double check it is accurate, and avoid clicking on it.

Shopping on public Wi-Fi can also be risky unless you connect in a secure manner, such as through a virtual private network (VPN) which encrypts your activity for extra security. In general, it’s best to avoid using public internet connections to shop or transmit credit card details.

Smart shoppers should also be wary of “formjacking” — this is a specific type of scam, where a legitimate website is hacked and made to direct legitimate shoppers to a fake payment page. To avoid this, always double-check URLs on checkout pages before entering any personal or financial information.

If you are shopping at the same store regularly, two-factor authentication can protect you too. This is an extra layer of security when logging into your shopping accounts.

For example, you might enter a password and then be sent a code via text message to enter into a website, further verifying it’s you. It’s often optional but choosing to enable two-factor authentication can protect your account from being used by anyone else — even if they have your username and password.

Being a shopping skeptic

Lastly, remember the golden rule of shopping online safely: If you think it’s a scam, it probably is. And it’s okay to be a bit skeptical, especially during holidays or when making large purchases.

Don’t click on suspicious links or give up personal information like your Social Security number, birthdate, home address or phone number unless you are absolutely sure of the store, connection and website’s trustworthiness.

Even after you complete your purchase, you can remain watchful. Make sure that the seller gives you a tracking number so you can follow the delivery, and contact someone if there are any issues.

Shopping online is safe and enjoyable so long as you stay aware.

This page and the information contained herein is for educational purposes only. The information is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any product, service, or strategy to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any links to other websites are included for your convenience only. Bread Financial does not endorse any product or service, and is not responsible for the accuracy or reliability of the information, made available through such sites.

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