How to protect yourself from online card fraud

Americans are expected to do much of their holiday shopping online this year, and criminals are expected to follow them. So here are some tips for safe digital shopping.

The United States has seen a steady rise in online card fraud in recent years, and it accelerated during the pandemic as more people shopped on the internet, according to a report in October from Aite-novarica Group, a business and technology consultant. Losses from online card fraud are expected to reach almost $8 billion by the end of this year, up from about $6 billion in 2019, the report said.

At the same time, consumers expect to do about two-thirds of their holiday spending this year online, according to a survey published by Deloitte.

And with tight supplies of merchandise and shipping delays, shoppers may turn to less familiar, less secure websites in search of the perfect gift.

“The supply shortage is drawing people to ever more peripheral websites,” said Brian Hamilton, chief executive of One, a startup digital banking service.

His company is seeing more disputed transactions, which is also happening in the broader payments and banking industry, he said.

Credit cards are often considered the safest payment option when shopping online because they have strong, federally mandated consumer protections. If you have a disagreement with a merchant or receive a defective product and can’t resolve the problem yourself, you can dispute it with your card company.

“The credit card goes to bat on your behalf,” said Chuck Bell, programs director of advocacy with Consumer Reports.

And if your card is stolen or hacked and you spot unauthorized charges, you aren’t liable for them — or could be responsible for $50 at most — if you report it promptly.

In addition, the major payment networks generally go beyond the requirements and extend zero fraud liability for credit card and certain debit card transactions, according to Wallethub.

Even so, having a card hacked can be a hassle. You’ll need to take time to report the matter to your card issuer. It will generally cancel your card and issue one with a new number, so you will need to reset any recurring payments or subscriptions.

For that reason, some shoppers may want to consider options like “virtual” credit cards or digital wallets, which add an extra layer of security when you use them.

Virtual cards are, in effect, temporary card numbers issued by your card company that are used to mask your real card number. If a website is fraudulent, or if a legitimate site is breached, your card number isn’t exposed.

Services like Applepay and Googlepay can also add protection when payment cards are used. The services create random account numbers, or “tokens,” that shield your real number when you make a purchase. The services are handy when shopping in person because you can store your card numbers on your mobile phone’s wallet. They can also be used online, although availability varies by merchant. Look for the symbol for each payment option at checkout.

Tokens and other security features are also used by the “Click to Pay” service, an offering from the major card processing networks, including Visa and Mastercard, that’s recommended by the American Bankers Association. You must register your credit or debit card on the network’s website or through your card company, and then select the “Click to Pay” button when making a purchase on a retailer’s website.

The service is used by more than 10,000 merchants and has “tens of millions” of cardholder participants, said Sukhmani Dev, senior vice president of digital products, North America, at Mastercard.