Tuesday, December 4, 2012

Could Shopping Online Be Hazardous to Your Bank Account?

I love shopping online. It is so convenient to sit in front of my computer and order just about anything I can think of without ever leaving my chair. No more changing out of my grungies into clothes more suited for shopping in person, no more planning my shopping trip around other duties or engagements, no more wasting gas driving to several stores to find exactly what I am looking for and no more parking tickets for not getting back to plug the parking meter of my car before my allotted time expires.

That makes shopping online sound like the perfect substitute for shopping locally, doesn't it?

Unfortunately, there are several drawbacks to shopping online that should be taken into consideration, before you make a permanent switch. But, as with most drawbacks, those associated with shopping online can be lessened, if not entirely avoided, by taking a few simple precautions.

Most online businesses are run by honest people, just as most local businesses are. However, there are exceptions no matter where you shop. About a year ago, I began to wonder what would happen if I made the mistake of giving out my credit card number online to an unscrupulous person. Could they wipe out my whole bank account? Would I have any recourse to recover damages from them, or would I just end up swallowing my losses and going on, hoping the next person I dealt with was an honest one?

This bothered me of and on to the point where I made a special trip to our bank and asked some questions. Verbally, they assured me that if I lost my card (which was a debit card, not a credit card), I would only be responsible for the first $50 of fraudulent charges, assuming that I reported my loss promptly.

The assurances didn't leave me as assured as I would like to have been so I asked them to open a new checking account for me in addition to my regular account. I deposited only a few dollars into it and began to use that account for my online purchases only. Since it was at the same bank as my regular account, I could transfer money into it whenever necessary to cover an online purchase. Since my accounts were online, I could do this from home. All very convenient.

This has worked very well, giving me confidence that even if someone did try to make fraudulent charges to my account, they would be limited to the small balance in the account.

Not long ago, I transferred a little over a hundred dollars into the account as I intended to shop for a more expensive item than usual online. I hadn't made my final decision yet and got busy doing other things so it kind of slipped my mind for a while.

A little over two weeks ago, I saw an offer online that interested me. You were supposed to receive a CD disc by mail and examine it for 7 days before letting the company know whether or not you wanted to become a regular customer of theirs. You only had to pay $2.50 for shipping the disc. I thought that sounded reasonable and smugly typed in the number of my special debit card to cover the cost.

When two weeks passed with no sign of the CD arriving, I went into my account only to find that they had charged $2.50 for shipping the disc, but also a 2.5 percent fee for international handling. Then, to my dismay, they had charged my account $39.95 for a one-month membership. Oh yes, and another 39 cents for an international handling fee. It seems that this company was located overseas somewhere.

Needless to say, I signed in online and transferred the rest of my balance out of that account to my regular account, and then headed to the bank to talk it over in person.

I told the teller that I had not received the CD I was supposed to be able to use for 7 days before making up my mind about the service, and that I had never authorized anything beyond the first $2.50 to be taken from my account. She sympathized with me and gave me a toll-free number to call to dispute the charges. Unfortunately, since the company was doing business from overseas, she doubted that I would recover the funds that had already been taken from the account, but was kind enough to commend me for removing the remainder of my money from the account. She cut up the debit card in question before giving me a new one with a different number.

She also gave me another tip which I also plan to share with you. So, to keep unscrupulous people from cleaning out your online bank account here are two things you can do:

1. Set up a small account like I did, (avoiding my mistake, of course).

Keep only enough money in this account to cover whatever you are purchasing online. Actually, this wouldn't be a bad idea for all of your shopping, except that you would probably be spending a lot of time transferring cash from one account to another. My mistake was in letting too much money accumulate in the account, and in not checking it frequently enough to catch the fraudulent charges earlier.

Actually, I think I was pretty lucky to get away with a loss of less than $50, and since the bank is investigating my claim, I may end up getting my money back. I suppose though that I might as well give up on ever receiving that CD disc they promised me.

2. Check into purchasing a limited amount credit card. (This is the tip the teller provided to me.)

You've seen gift cards and phone cards you can purchase at places like Target, or Wal-Mart. They also have limited credit cards which can be purchased in different amounts like $30 or $50. When you use them online, the amount of your purchase is deducted from the card's value immediately. If you order some books for $25 online and used your pre-paid $30 credit card to pay for them, it would be impossible for the company to charge more than an additional $5 to your account. If you should lose your card, you would never lose more than the value remaining on it. This kind of card might be worth considering for teens who are notorious for losing their debit cards.

My experience hasn't dampened my enthusiasm for shopping online. I am just a lot more cautious these days, and hope that my suggestions may help you be less likely to become a victim yourself.

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