Identity Theft: Risks of Online Purchases

What percentage of your purchases do you make online? Do you take advantage of online bill pay? Do you use services like Amazon, E-Bay and Ubid? If so, your chances of falling victim to identity theft are significantly higher, and you may not even realize that you are at risk.

Authorities estimate that identity theft has increased in occurrence by at least 60% since the advent of the Internet. While we enjoy the benefits put forth by the World Wide Web, and we enjoy the convenience of ordering products online, we must also be familiar with the risks associated with online purchasing. Every time you enter your name, your address, your credit card information and your social security number into an online form, that data is stored. So who has access to that storage?

Thankfully, online vendors are beginning to realize the risks their customers face, and are taking measures to reduce the threat of identity theft using software and other technology-based security procedures. Privacy policies insist that customer information will not be made available for sale, and employees who handle the information are subjected to rigorous background checks.

The fact remains, however, that consumers have virtually no control over what happens to their credit card numbers and check routing information after they click the “Submit” button. They don’t know for sure how their personally identifiable information is catalogued, and who has access to the data at will.

This doesn’t mean that people should avoid making Internet purchases altogether, but it does indicate that consumers should exercise caution and prudence when submitting information to web companies. Checking into the backgrounds of businesses and installing anti-phishing tools are a great way to start.


We automatically trust large corporations such as Wal-Mart and Home Depot to take care of our information, but there are plenty of “no-name” vendors whose histories are unknown. Where did they come from? What are their policies? Do they have criminal records?

Use the consumer advocate tools available to research small businesses before making online purchases. The Better Business Bureau and the Federal Trade Commission can provide comprehensive reports on the business histories of certain companies, and Internet forums will be filled with consumers who have had both positive and negative experiences. If you start to see several accounts of fraud or misrepresentation, take your credit card elsewhere. Better safe than sorry.

You should also make sure that the business offers a physical business address, a telephone number and other contact information. Call them before making your purchase to make sure that the information is valid and that the company actually exists in a professional capacity.

Anti-Phishing Tools

Adding a phishing toolbar to your web browser may also help in identifying questionable websites. The phishing tools are designed to warn consumers about sites with hidden addresses and to verify web URL’s. Although this will not help with keeping your financial information secure, it will help guard against websites that forward your information to other individuals who might be cataloging said data.

Unfortunately, these practices will not prevent identity theft altogether. Web applications are not foolproof and new, dishonest businesses are born every day. It is impossible for the Better Business Bureau to keep track of every company to grace the web; therefore, many people must rely on instincts to keep their information secure.

Here are a few tips to avoid the consequences of identity theft:

Check your statements.

Make sure that you keep track of all of your bank and credit card statements. Record all transactions as you make them and check them against the statements provided by your financial institutions so that you know there are no fraudulent charges. Even small amounts – under $5.00 – could be the work of a scam artist. They bleed your bank accounts slowly over long periods of time in an attempt to evade your notice.

Choose Internet vendors carefully.

It is best to only order products from Internet vendors who guarantee your privacy and who utilize some type of software to help keep customer information secure. If there are no such measures taken, you cannot know where your information is stored, and it is best to shop elsewhere.

1. Report fraudulent transactions immediately.

If you notice that there are charges to your credit card that should not exist, contact your financial institution immediately. Even if the purchase could have been made by a spouse or other family member, cancel the card and order a new one. It is better to be safe than sorry.

2. Obtain your credit report.

Keeping track of your most current accounts is not enough. You make have credit card accounts that have not been used in ten years, but which have not been closed through the bank. If someone got ahold of that information, they could be charging enormous purchases to your account without your knowledge.

Your credit report will bear all information from all accounts – both new and old. If there is activity on an account that is no longer in use, contact the lender immediately.

3. Apply for Secure Credit Cards

When you are shopping for credit cards, choose banks that offer security protection on your account. Look for statements like, “no liability on fraudulent charges” and “total security protection.” This way, if someone does steal your information, you will not be held liable for charges you did not make.

4. Print all transaction records.

When you make an Internet purchase, print the receipt after the order has been placed. Some fraudulent companies will simply add several dollars to a purchase without your knowledge, then claim later that it was the original purchase price. Without a receipt, you will not be able to prove that fraud has taken place.

Also see instant credit reports, VantageScore, ways to improve credit score

If you are real worried about Identity Theft we recommend you check out the governments free website devoted to helping stop this growing form of crime. Concerned readers should also read our recently added safety tips when using credit cards.