Safest Way to Pay Online

With the holidays approaching and the current gas crunch, you may have thought about taking the leap and making some of your holiday purchases online. Free shipping offers and online coupons make Internet shopping very tempting. Even still, you may be a bit skeptical. What is the safest way to pay for an item online?

Research indicates that paying with a credit card online is the safest way to make online purchases. According to the Federal Trade Commission (FTC), a credit card offers the protection that you have a legal right to dispute unauthorized charges. The Fair Credit Billing Act (FCBA) provides that you “cannot be liable for more than $50 for unauthorized credit charges” if your credit card is stolen or lost. In addition, you are protected against a number of specific situations and may dispute credit card charges including:

• Unauthorized credit charges
• Charges for goods or services you did not accept
• Charges to your account for items that were not delivered as promised or were never ordered, received or were misrepresented.

If you have thought about using a debit card for online purchases, think again. The legal protections for debit cards are not the same as for credit cards. If another person uses your debit card or illegally makes an electronic fund transfer without your authorization, you can be out from $50 to $500 or more subject to when you report the missing card. If the loss is reported within two business days of the discovery, you will not be liable for more than $50 of unauthorized charges. If the loss is not reported within a 60 day time frame of when your statement was mailed, you may be liable for up to $500. If you do not report the theft in that 60 days block of time after the statement is mailed, “you risk unlimited loss”.

Financial establishments that issue debit cards have differing policies and some may willingly limit liabilities at $50 for certain situations. It is a good idea to check with the company that issued debit/ATM card about their policies whether you shop online or not. For example, National City has a “Zero Liability pledge” that promises that you will never be liable for “any funds improperly removed for your accounts due to theft of your account numbers or PIN (Personal Identification Number).”

Some consumers may consider using electronic check payments to pay for items online. While this payment method alleviates the monthly credit card bill, it also eliminates the protection that a credit card offers to dispute charges.

By using credit cards to make purchases online, you have the fraud protection to dispute charges and you are not legally responsible for more than $50 for charges that you did not authorize. For holiday purchases and for online purchases in general, a credit card is the safest way to pay online.