How to Secure Online Payments and Avoid Fraud

Online shopping is quickly becoming the norm, as evidenced by its impact on U.S. retail sales. According to Forrester, U.S. online retail sales will reach more than $500 billion by 2020, up from $373 billion in 2016. Meanwhile, brokerage firm Credit Suisse said in a recent report that more than 8,600 brick-and-mortar stores are likely to close in 2017. (The report said 2,056 stores closed in 2016 while 2008 was the worst year on record, with 6,163 stores closing their doors.)

Retailers can thank the improved economy, their own strategic efforts, and even Amazon for driving the trend. However, while web payments are popular and convenient for customers, they carry a number of risks.

Among these risks, say security experts, are fraudulent transactions. According to Riskified, mobile transactions in amounts greater than $1,000 are three times more likely to be fraudulent than those worth less than $200. This could signal identity theft if the buyer did not mean to make the purchase, and lost revenue for sellers.

Easy targets.

Consumers using older smartphones may be at risk for the latest viruses and malware. Hackers are always on the hunt for new ways to get what they want, and older smartphones can be more prone to hacks and viruses. Some hackers will even hold smartphone data hostage until the victim agrees to pay a ransom.

Pop-up ads, phishing activities and fake apps that install viruses meant to steal consumers’ bank details (or to trick them into paying for goods or services they don’t want) are also on the rise. With the rise of digital transactions, many people ask, are payment apps safe? While these apps offer convenience, they are also a prime target for cybercriminals who exploit security vulnerabilities.

It’s clear that we all need to be aware of the genuine risks of shopping online and take steps to lower our vulnerability.

Five Tips for Being a Safe Online Shopper

Read the security tips below and implement them, if you haven’t already, before you go shopping online again. They could save you time, money and hassles:

1. Avoid Phishing Scams

If you receive an email from a retailer with only a link, don’t click — even if it’s from a company you know. (You can always verify the message with the sender in a separate note.) As a rule, phishing links will direct you to a clone site that looks like the real thing and solicit your personal information or, worse, download malware onto your computer as soon as you click.

2. Encrypt Your Data

To secure your online transactions, the Federal Trade Commission recommends using encryption software, which scrambles the information you send over the internet. “A ‘lock’ icon on the status bar of your internet browser means your information will be safe when it’s transmitted,” the FTC says. Check for the lock before you share your personal information online.

3. Set Bank Alerts

Many banks offer mobile notifications for each transaction, which are easy to sign up for online or through a bank’s app. The alerts can help you keep tabs on your finances by alerting you when payments are due, when your balance has gone over a specific amount or you’re bumping up against your credit limit. More importantly, these notifications are very helpful for identifying potential bank or credit card fraud: No one knows better if a purchase was legitimate than the cardholder.

4. Set Strong Passwords and Usernames

Strong passwords are key to keeping your payments secure. Choose a strong password — it helps to start with a phrase or the first letter of each word in a phrase as your core password, then add some numbers before or after — and strive to use a different username and password for each account you have. Keep all your passwords recorded in an offline notebook or journal.

5. Use Security Software

Anti-virus software, anti-spyware software, and firewalls can all be helpful in preventing fraud, the FTC notes. Be sure to update your protections often and safeguard your operating system and any other software you use often.

Online safety starts with you.

Digital payments are convenient, quick, and easy. But because the internet ecosystem is a prime target for fraud and crime, you must keep your wits about you and implement a few important precautions before making purchases or divulging personal financial information. Be proactive in making your security a top priority and you’ll have less to worry about when spending your hard-earned money online.

Jeanine Skowronski is the executive editor of Credit.com. Her work has been featured by The Wall Street Journal, American Banker, TheStreet, Newsweek, Business Insider, Yahoo Finance, MSN, Fox Business, Forbes, CNBC, and various other online publications.