Web Shop 'Til You Drop ... But Carefully

An increasing number of people are ditching the malls and surfing the Web this holiday season as they try to finish off their shopping lists, but experts say e-shoppers need to protect themselves against bogus merchants and identity theft.

"If online shoppers exercise their common sense, trust their instincts and take basic protective measures, they are likely to enjoy a safe, comfortable gift-buying experience this holiday season," said Ken Hunter, president and CEO of the Council of Better Business Bureaus (search).

The Better Business Bureau says online shoppers face two distinct challenges: identifying reputable merchants (and avoiding dishonest vendors) and protecting against online threats to their personal security.

Jupiter Research (search) recently found that 40 percent of people it polled in a survey said they planned to do some of their shopping on the Internet this year, up 18 percent from a year ago.

But a Business Software Alliance survey also showed that of the 63 percent of U.S. Internet users who said they will do some shopping online, 79 percent were worried about transmitting a credit card number and 77 percent about transmitting an address or personal information.

Researching the merchant before you purchase is key, said Jim McCarthy, senior vice president for emerging products for Visa U.S.A.

"Get comfortable that you're in a good neighborhood online," he said. To get information about fraudulent e-tailers, consumers can check out the Federal Trade Commission's Web site and the BBB online.

Visa encourages its customers to sign up for its "Verified by Visa" program (search), which enables issuing banks to validate a cardholder's identity through a password during the online checkout process. About 9,000 banks and credit unions participate, as do about 250 million cardholders and 2,000 online merchants like Niketown.com, Walmart.com and 1800Flowers.com. Consumers can check the Visa Web site to see the merchant list.

"Shadow sites" — or "fishing" — become more common around the holidays, said Jim Vaules, a fraud consultant with LexisNexis (search), which provides identity verification and authentication products for corporations, government and financial institutions. This practice occurs when an e-mail purporting to be from a reputable company like eBay (EBAY) is sent to consumers saying their account information needs to be updated and asks for your personal information.

"A lot of folks provide their information and of course are in jeopardy — it seems to happen more time around the holidays or not," Vaules said.

Consumers should read and understand an e-commerce Web site’s privacy policy and make sure it says how and why personal information will be used, he added.

"You want to be in control and the way you're in control is that you initiate the request — you don't want to be responding to requests over the Internet or by phone for your personal information," Vaules said.

According to a recent study by the FTC, almost 10 million Americans have become victims of identity theft in the last year alone.

Various companies and organizations recommend people make sure all online transactions occur through a secure server; a small icon on your window — usually a closed lock or solid key — indicates the connection is secure. Some sites bear the BBB seal of approval, which indicates the business has met high privacy protection and other safe e-commerce standards.

TRUSTe (search) trustmark is another sign consumers may want to look for. TRUSTe, an independent, non-profit privacy group dedicated to building trust and confidence on the Internet, puts its seal on sites which have had their privacy statement approved. The trustmark also tells the browser that the site has agreed to a set of established privacy principles and oversight.

"If you're online, you've probably got the most powerful consumer tool ever, " said Visa U.S.A.'s McCarthy. "Use that to your advantage because the consumer is king on the Internet."