How to shop online without getting malled

Obelcz uses one credit card for all his online purchases and had the bank limit it to $1,000. He sticks to major retailers, but if he buys from an unfamiliar Web site, he uses his PayPal account so the merchant doesn't see his credit card number. He also scrutinizes his credit card summary every few days.

"I watch activity on it like a hawk," said the Microsoft product manager, who is still trying to restore his credit 18 months after he became the victim of identity theft. "I haven't been so burned by the experience that I won't do it. The reality is, this is how people shop."

Online holiday sales are expected to hit $27 billion, a 23 percent jump over last year, according to Forrester Research. But many shoppers don't follow through with their purchases online because they worry about fraud or identity theft, multiple surveys have shown.

" 'Buyer beware' applies with an order of magnitude when you're shopping online," said Jorgen Wouters, a senior producer with Consumer Reports WebWatch.

Use common sense to check out the Web site: Is there a physical address? Does someone answer the customer hot line? Is the Web site secure? And see if others are ranting about them on Web sites like ripoffreport.com.

"Be wary of ordering from a merchant that you've never heard of," said Beth Givens, director of the Privacy Rights Clearinghouse. If you want to deal with an unfamiliar merchant, she suggests buying something small first to test them out.

Read a Web site's privacy or security policy to find out how they will share your information with others and find out how you can opt out of such data sharing. It may be reassuring to see a third-party privacy seal of approval, but it's not a guarantee that the merchant is following specific guidelines.

"I'm sure it gives some customers who don't necessarily understand what's behind the seal some feelings of comfort. It may be misguided, but it does," said Jonathan Penn, an analyst at Forrester Research. "A lot of them don't have any requirements ... other than that you have a privacy policy."

Generally, having a privacy seal such as TRUSTe or BBBonline is still better than having none at all, said Wouters, who likes both of those seals.

"You can use them as an intermediary for you, and you have a strategy for your complaint," said Givens. "It just gives you one more strategy in case something goes wrong."

A number of services are trying to reassure spooked online shoppers by offering independent verification of a site's security, guaranteeing sales transactions or acting as a payment middleman.

"Consumers are really concerned about fraud," said Vince Talbert, vice president of marketing for I4 Commerce, which manages the payment service Bill Me Later.

Like PayPal, it caters to online shoppers who don't want to share their credit card information or want an added buffer between them and a merchant.

When you click on the Bill Me Later icon at the checkout of participating merchants, you're basically asking the service to put the purchase on "your tab." The service identifies you by asking for your birth date and last four digits of your Social Security number. It checks your credit and then pays the merchant and sends you the bill two weeks later.

"You don't have to worry about putting your credit card number out there," said Talbert, whose company has 2 million customers and 425 retailers, such as Wal-Mart and Toys "R" Us. Buyers aren't liable for fraud, he said.

BuySAFE, which started its business on eBay, is just one of many third-party companies trying to reassure online shoppers.

The company certifies merchants and gives shoppers the option to bond their purchases for a percentage of what that item costs. BuySAFE says about 15 percent to 20 percent of its buyers pay for that added coverage.

BuySAFE reviews the financial background and verifies the identity of every merchant that gets its silver seal. It guarantees all of its purchases for up to $25,000 if the merchant has a gold seal.

Consumers also can use virtual account numbers to avoid having to give out their actual credit card number. Cardholders with Citibank or Discover can get these randomly generated credit card numbers to use for a single transaction.

Givens thinks using a credit card when you buy online gives you plenty of protection, since unauthorized charges of $50 or more are covered by federal law. Never use a debit or check card, which could expose your bank account to theft, she said.

Obelcz, 39, sticks to major retailers because they're more secure. "It gets a little more risky when you go outside those, especially fringe sites," he said.

When he bought karaoke discs off a lesser-known Web site, it was supposedly encrypted and had the signs like a lock in the corner. But he still thinks that's how someone skimmed his credit card number.

He checked his online credit card statement the next day and quickly spotted about $100 worth of porn charged on his card. The credit card company covered that loss, but it helped that he monitored the activity.

"At the end of the day, it's not going to stop me from buying online," Obelcz said. "I loathe going to the mall."

ONLINE SHOPPING TIPS

Shop at secure Web sites that uses encryption technology to scramble your information when it is sent to the online merchant's computer. Look at the top of your screen and make sure the url displays an "s" like "https://" Or you can look for the closed padlock icon or an unbroken key at the bottom of your screen.

Do business with companies you know. If the company is unfamiliar, do your homework before you buy; start with an inexpensive item.

Shop using a credit card, which gives you greater protection under the federal Fair Credit Billing Act (you are responsible for only $50 if someone uses your credit without your authorization). Make sure that credit card is a true credit card and not a debit, check card or ATM card that could expose your bank account to thieves.

Use one credit card for online payments to make it easier to track wrongful credit charges.

Disclose only bare facts when you order. Don't answer questions you feel are not needed to process your order.

Always print copies of confirmations of your order.

Shop with companies located in the U.S. because you're protected by state and federal consumer laws. The seller must tell you whether the written warranty is "full" or "limited" if the consumer product costs more than $10.

-- From the Privacy Rights Clearinghouse

P-I reporter Phuong Cat Le can be reached at 206-448-8390 or phuongle@seattlepi.com.

ADD P-I Personal Finance headlines to