How to Shop Online Safely: Expert Shopping Tips

Online shopping has become a part of a modern life routine. More and more consumers choose to shop online because it provides a wider range of products, better deals as well as saves time if compared with traditional shopping.

However, having its evident benefits, online shopping can also be tricky. As seen from consumer complaints, people often face issues with online payments and scams when using credit cards and sharing personal data.

You want to be as safe as possible when you are purchasing things online and entering your information online.

We’ve decided to dig into the topic and seek expert tips for safe shopping online. In this video interview, Nathan Grant, a Senior Credit Industry Analyst with Credit Card Insider, helped us answer consumers’ top questions about online payments, shopping, and shopping scams. Watch the video to uncover insights:

Below you’ll find expert answers and online shopping tips covered in this video interview:

• How safe is online shopping?
• Shopping with credit cards vs. Paypal
• Tips to avoid payment fraud
• Split payments for online purchases

How Safe Is Online Shopping?

Michael: How safe is today's shopping online?

Nathan Grant: So in a lot of ways, shopping online is one of the safest ways to shop. If you are taking the right steps. You have to think from a physical to digital perspective, you're not handling cash physically.

So being able to shop online immediately removes one layer of potential danger when it comes to shopping in general. But a lot of the stuff when it comes to shopping online really is about taking the proper precautions before you even enter any information online. So that goes from making sure the site that you're shopping with is a secure site.

Even outside of the site itself, you want to make sure that whatever networks you're entering that information on, aren't a public network. It's something that's secured as well. So it can be safe when you take those things into account, but then there's also how you choose to pay to shop online.

There are more ways to pay than ever and every one of those has its own pros and cons. Some of them have a lot more pros and I'm definitely going to be discussing all of them today. But in general, we have to realize that, especially since the pandemic, online shopping has increased tremendously. More and more people than ever are doing it.

So businesses and retailers are realizing that and we've seen a lot of retail websites really improve because there's a lot of times, even in the last few years where you'd go to the shop on a website and you're like, "This looks antiquated." It was from a few years ago, as an older generation of the internet.

Now, I don't want to say all, but most retailers have really increased their presence online, offering a lot of the same benefits from shopping in a face-to-face brick-and-mortar situation to their online marketplaces. For so many people, it is just so convenient to be able to shop online. You want to be as safe as possible when you are purchasing things online and entering your information online.

Credit Card Vs. Paypal: How To Pay Online?

Michael: So a consumer has a choice of paying via credit card or via PayPal. What are the pros and cons of the choices?

Nathan: Well, I'm glad you mentioned that because one of the things I really wanted to get into was some of these newer ways to pay. So in general, most people are putting a card number in when they're shopping online. Now the thing about that is a lot of people look at debit cards and credit cards in the same way. But specifically, when we're talking about safety and shopping safely online, there's actually quite a difference between just those two to start.

Debit Cards or Credit Cards for Online Shopping

Nathan: I'll give the example of a debit card and a credit card, they're similar in that they have a number, you put an expiration date and a security code in online. Whatever merchant you're shopping at, you put in that same information, but your debit card is connected to your bank account. It's your money on the line when you're using that.

A credit card is the borrowed money from the issuer, and as long as you're not spending money that you shouldn't be on your card and you know you're going to pay it back by your due date. The benefits supremely outweigh using a debit card. For one, there are protections in place because of the fair credit reporting act for credit cards that aren't in place for debit cards.

So what that means is in the terrible situation where you might become a victim of fraud or identity theft, and your card information was compromised, with a credit card you can contact your issuer, they'll get a new number and a new physical card out to you right away and you can resume using the card right away. So you can go onto another website right after and continue shopping. With a debit card that's your money that's been withdrawn if it wasn't the charge that you did.

So not only does it take longer and it's different per bank or credit union, how long it could be to get your money back in when there has been a fraud. So that varies too, which is unfortunate, but not only is it going to take longer, but your money's been withdrawn at that time.

So you might have other purchases you need to make or bills you need to pay that are now being affected by that.

I would always say to use a credit card over a debit card when shopping online…

Some issuers, not all, are now offering what are called virtual credit card numbers, and basically what those are is if you went onto your website for your credit account, they have a thing that says generate virtual credit card number.

When you click that, it will give you a unique number just as long as your credit card number, and sometimes they let you put the expiration date, but sometimes they'll generate that too and a unique security code. So, basically what that does is it lets you use that as a virtual digital version of your existing account with a completely different number.

That's a one-time-use number. So the benefits to that are that they are now not putting your actual information out there. So by using this digital number, this virtual number, you're able to make the purchase and if somebody got that information after the fact, it's a one-time-use number.

So that right there, if your issuer offers that is a super safe way to use your credit card when shopping online. But you mentioned PayPal and I'm very glad that you did mention that because when we're talking about safety, in my opinion, one of the safest things you can do is use digital and mobile wallets.

PayPal for Online Shopping 

Nathan: So PayPal is a digital wallet, but then similarly there are mobile wallets, which are Google Pay and Apple Pay. What makes all of those similar is that what you're doing is connecting those accounts, those wallets to whether it's your checking account, your debit card, your credit card, you're inputting the different payment methods into those different wallets.

So if you're shopping online and a website allows you to pay with PayPal or pay with one of your mobile wallets, you're now doing a similar thing to the virtual credit card number. It's a process called tokenization because it's generating that one-time token. Again, it's giving you that layer of security. There's nothing that fraudsters and criminals could do with that unique number because it was only tied to that one transaction and it's unique every time you use one of those wallets.

So if you have PayPal, if you have Apple Pay or Google Pay, and it offers that as an option on a website, that's going to be your most secure way. What I find interesting about that is if you tied your debit card to that account, it's not even putting your debit card number at risk. So it's making your debit card more secure than if you just used it directly.

So we're seeing a growth in those being, not just used more, but offered more. More and more places are offering it and the benefits of the mobile wallets extend beyond just shopping online because many terminals offer the tap to pay, which you normally would tap your card to do. You can use your phone in a similar fashion and so it's really just making convenience and safety a priority.

When it comes to things like your personal information, especially your financial information, that's just more important than ever. So I would strongly recommend that if anybody's interested in using those things, that's going to be your safest way, especially when shopping online.

Tips to Avoid Payment Fraud When Shopping Online

Michael: … credit cards, certainly, a safer way to go than debit cards, and thank you for speaking about the wallets. So, if someone becomes a victim of online fraud, what consumers can do, should do, what are your recommendations to consumers if someone became a victim of fraud?

Nathan: So things happen, there are data breaches. So things that could even be out of your hands, but maybe you went on a website that wasn't safe and put in your information, and then you found out after the fact, "Oh no." Or maybe something popped up on your credit reports or your bank account where you're like, "Wait, I didn't make that purchase." What are you going to do?

So the first thing you want to do when you identify something that you know is not your transaction is to immediately prevent further damage. 

Tip 1: Put a credit freeze

So the best ways to do that are when it comes to credit, you can put a credit freeze on each of your credit reports. So what a credit freeze basically does is it prevents anyone, even yourself from placing a hard inquiry on your credit reports.

As a reminder, anytime you apply for new credit, you have to do a hard inquiry. If you do too many of those in a short amount of time, that's how people see their credit scores go down a little bit and they're like, "What's happening?" Every time you do one of those, it does dip a little bit.

So definitely don't want to do too much at once, but putting your credit freeze in place, so that'll immediately prevent any more damage. So if somebody has your information and then they've done something once and you caught it, you can prevent anything further at that point. So that's the starting point is to prevent anything else until you get things resolved and get new numbers and everything like that.

Tip 2: Activate a fraud alert on your credit report

There's also a middle ground, not quite as far as a credit freeze, but it's something else that you should do. Most issuers offer this is what's called a fraud alert, and what that does is instead of completely locking out your credit until you unfreeze it, you actually get a notification.

So when you sign up for fraud alerts, you provide your contact information so if anybody were to try and check a hard inquiry on your credit reports, you would get called first. So that way it's avoiding something happening without you knowing about it. It's good to know if you have that in place, because let's say you're applying for a vehicle lease, sometimes they take all the information down and have you fill out the application and then a couple of days later, or they do the actual heart inquiry.

If you have a fraud alert you can catch that and you might at first be like, "Oh no, did something get compromised?" But then you might go, "Oh, that one's okay." You can manually approve it. So nothing will go forward without you doing it. But then you don't have to worry about freezing your credit reports and maybe waiting a day or two for it to be accessible again. So it's good to know both of those things, but that's pretty much the first line of defense.

Tip 3: File an identity theft report

Once that's taken care of, then you need to file an identity theft report. So you would go to IdentityTheft.gov and the federal trade commission is who works with that site. So you would basically put in all your information, what you found out like, how it was used, how you think it might've been accessed, and obviously there are some things you might not know.

Every situation might be a little different, but basically provide them with all the information that you do know about identity theft, what information is out there, and then your personal information so that way they can take it out. Because this is a federal agency. They're going to make sure if fraud did take place, they need all the information they can so that they can take action.

It might be instinct to want to call the police first or something like that but the actual report from the FTC might help you in a case if let's say there was like a local credit card scammer going around and taking it was information at gas pumps, your story to try and get justice served would be helped by what the identity theft report might find out for you. So always best to just go right to identitytheft.gov to take care of that.

Tip 4: Check your credit reports regularly

Then going forward, you want to look at your credit reports and there might be additional things you missed. You want to look for any suspicious or fraudulent accounts that might be showing up or charters that might've shown up on your account because your credit scores could be damaged by having something that wasn't your fault sitting there showing against your credit.

So very important to check it regularly. Luckily right now you can go to AnnualCreditReport.com, which normally would let you check each of the three main credit reports once per year. But since the pandemic, they've extended it where you can check it weekly now. At least right now it's through April 2021. So having that available to be able to check things more regularly, you can really find if there's something that looks suspicious.

If it's suspicious again, they're going to take care of it. This is a federal organization that takes care of stuff like this. So you can get that removed, the bureaus will remove that from your report so you won't have further damage or damage going down the line. They can remove that immediately, but I will say…

...make sure that it's truly fraudulent stuff because if you try getting collections accounts removed and stuff, that's illegal. You don't want to do that.

You want to make sure that it's only the things that are fraudulent to get removed. So from that point on, it's really just playing it safe and I've talked about the ways to pay, but I would say especially if you've found yourself to be the victim of fraud or identity theft, you want to just go forward...

Tip 5: Make sure the site is safe

I told you at the beginning that shopping online can be one of the safest ways. I think probably the first line of defense, or not even defenses, when you take action, there's two easy ways to tell if a site is secure, that you might want, even if it's a smaller site, this is something that you can do to really help.

You look up at the address bar, whether it's on your mobile phone, your tablet, your computer, on the address bar itself if there's a little lock symbol next to the address, that means the site is securely encrypted.

So you know that any information, personal or financial information that you put on that site has secure encryption behind it. Another way to look at it is the address itself, we're all familiar with how websites usually start with HTTP://.

But if you see HTTPS, that's another way to tell that that asset is for secure encryption. 

So that's something you can do going forward, whether you have, or haven't become a victim of fraud or identity theft, you can tell right there that, "Hey, this is a site that I can trust." So immediate stuff that can help you, but if you don't know about it, you don't even know to look for how you are supposed to take defensive action against it. So I think that's one of the most important things to remember is it takes a second to check that, and then it could save you headaches for weeks if you didn't do that.

Split Payments for Online Purchases

Michael: There are a variety of ways for the modern consumer to get money to buy things, besides credit cards, besides debit cards, we have things like split payments on online stores. There are firms like Affirm that offer immediate loans for purchases. What are your thoughts on companies like Affirm?

Nathan: Just like a credit card, it is going to be a hard inquiry on your credit reports to be approved for something like that. So knowing that will factor in, if you've done several other increases for credit in a short amount of time, that could negatively impact your credit scores going in. 

But it's funny because even if it's not a credit card per se, the same basic things apply where it's making your on-time payments and stuff. Is it a good idea to do that? If it's going to make a purchase that you need to make easier and you know exactly what you're paying because you know, that's a lot of times too is a factor in the interest, factor in what it's going to cost over time.

It's usually more when you do that, but there are some scenarios I've heard of where there might be an interest-free option, but it might have a fee at the beginning or something like that.

So you just want to make sure you know what you're signing up for…

... as much as we like to scroll past the terms and conditions and stuff, it is so important to read some of that stuff to make sure you're getting the right information, knowing where you're standing.

So you're not surprised, you're not hitting a wall down the line that's like, "Oh no, I didn't know this was coming up." Even things like paying your taxes, if you choose to pay overtime, you have to realize how that's changing the amount you owe than if you just paid outright. 

So even when it comes to shopping and signing up for things like this, you want to make sure you know all the details before you make any decisions. Everybody has a different experience going into credit cards.

It's not really like a blanket approach. Some things are like blanket rules that apply to their credit cards, but everybody has their own needs and desires when looking for a credit card. So that's how we help define what are the best choices in each of those categories.

Michael: Nathan, I would like to thank you for your expert tips in the credit card industry. This conversation was very informative for consumers. Guys thank you for watching.

Nathan: Thanks, Michael, it was great talking to you too.

If you enjoy buying things online, you should always think of your safety. Be cautious of what you purchase and on which websites. Follow expert tips on safe online shopping and avoid shopping scams.

If you have questions, feel free to leave a comment below. We’ll be happy to forward them to Nathan. Subscribe to our YouTube channel to watch more expert videos.