Online Buyer's Guide

Paying Online

You've put your selections into the shopping cart, and you're ready to check out. The next thing you'll need to do is provide a way to pay for your goods. There are many ways to do this, as explained below.

There are a few special considerations to keep in mind:

Be sure to check the Privacy and Security section for instructions on how to confirm your use of a secure server before you make an online credit card payment.

Privacy statements should also be checked! Review the site's privacy statement to see whether its database of credit information is encrypted (scrambled) and stored securely; and if access to those files is limited to necessary merchant personnel, how long the data are stored; or alternatively, if credit information could be purged after processing.

SITES TO SEE:
Federal Trade Commission's Guide to Online Payments
http://www.ftc.gov/bcp/conline/pubs/online/payments.htm
and their related Shop Safely Online
http://www.ftc.gov/bcp/conline/pubs/online/cybrsmrt.htm

Using Your Credit Card Online

Many people consider online transactions to be safer than transactions in the physical world of traditional shopping. Payment by credit card offers cardholders the most liability protection of any of the methods of payment for online purchases. Under the Fair Credit Billing Act, customers are liable for only the first $50 of reported fraudulent credit card transactions. In addition, some cards provide additional warranty or "purchase protection" plans on purchases made with that card.

In the case of credit or debit card orders, find out if your purchase will initiate a recurring charge with the merchant. For example, if you order a subscription online, will they automatically recharge your card at renewal, or will they contact you first? If it is to be an approved recurring charge, make certain to take note of the cancellation policy.

Pre-Paid Internet Shopping Cards

Major credit card companies are introducing a variety of disposable credit cards that can be used on the Internet. American Express, for example, has teamed up with 7-11 to sell you a card with values in increments of $25, up to $1000. This is a nice extension of the anonymity of cash, but is only usable at stores that accept American Express cards. MBNA, a major credit card issuing company, offers its customers an alternative that requires them to use MBNA's website to generate a one-time use credit card number. Ask your bank or card issuer if they have something that might work for you.

Using Debit Cards Instead of Credit Cards

Your financial liability may be a problem when using a debit card for purchases, so make sure you understand your issuing bank's policy on debit cards–the limit of your liability and the process in case of dispute–before using them for online transactions. Since your payment is automatically debited from your account, you must seek other recourse in case of a dispute with your vendor. (See the Privacy and Security section for more on this.)

Electronic Wallets

Electronic wallets are another way to pay for goods and services online. A wallet service typically keeps your billing and shipping address(es) and credit card number(s) on file–in an encrypted form. Vendors who support the different kinds of wallets use special server technology that can read your credit card information when you're ready to buy.

SITES TO SEE:
http://wallet.yahoo.com/ (an example)

Escrow Accounts

Both buying and selling on the Internet involve transactions with people you don't know. Escrow accounts can be a safe and convenient way to buy from such people. Typically, the buyer deposits a payment with an escrow service. The seller ships the goods, and when the buyer accepts them, the escrow service releases the buyer's funds to the seller. Otherwise, the goods are returned to the seller and the payment is refunded to the buyer.

SITES TO SEE:
http://www.paypal.com/
http://www.rocketcash.com/

Online Billing, Bill-Paying Services, and Account Managers

Do you dread the postal delivery of bills from utility companies, phone and cable companies, credit cards, and more? Perhaps you'd appreciate the convenience of having all your bills online, in one place, where you can review, manage, and pay your accounts from one service. You can commonly find this service through your bank or from select commercial Internet service companies. Other services, such as frequent flyer mileage accounts, can also be managed through an online service.

Be aware that your online payment may not go directly into your provider's account. Many companies don't yet participate in electronic funds transfer, so your bill-paying service may need to write a check for you and mail it. If something happens to the check that they wrote on your behalf, you're responsible.

Online Purchases with Off-Line Payment Methods

Two common options exist for making purchases online but paying off line:

The Privacy and Security section has more information on why this might be important.

Return or Exchange of Gifts

When purchasing a gift for someone, ask questions in advance. Who gets credit for returned merchandise, the purchaser or the recipient? Who is charged for the return shipping? Does the vendor site have a policy on this, and is there any way around it?

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