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Shopping online? Some safety tips

November 25, 2006 13:39 IST

Marsha Colliers only shops online during the holidays. And she doesn't limit her purchases to socks: In past years she's bought $800 worth of mink coats, a yellow Chevrolet SSR shipped from Rochester, NY, to her house in Los Angles and a timeshare in Miami Beach, Fla. "I'm never that guy who stood all day in line to get the sale," she says. Colliers has also never been scammed.

Colliers, author of Santa Shops on eBay, says she can land online deals without getting ripped off because she's an extra-cautious cybershopper. "I work hard for my money, and I don't want to be at risk," she says.

Holiday season is bonus time for Internet thieves, who troll the Web for credit card numbers and passwords. Last year consumers spent $30.1 billion holiday shopping online, a 30 per cent increase from 2004, according to Nielsen/NetRatings' Holiday eSpending Report.

Analysts expect online sales to grow even more this year. Yet according to new data by Forrester Research, only 45 per cent of Americans believe online shopping is safe and even fewer trust Internet retailers.

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Their instinct is correct: Customers looking for holiday deals may be most at risk, as budget brands and lesser known retailers are more likely to trade off security for low prices. Hackers embed malicious software into insecure sites, designed to steal customers' financial information. More online shopping means more credit card numbers to steal.

As more consumers do their holiday shopping online, the thieves are bound to follow. But there are things shoppers can do to reduce their risk. Here's how to avoid getting more than you asked for this holiday season.

Before you even start shopping, update your computer security. Shopping online without protection is like wearing your ATM code and bank account number on your shirt. Fend off thieves by installing firewalls, anti-virus software and security updates to your browser.

Make sure you're shopping from trusted sites, says Steve Salter, vice president of the Better Business Bureau's online division. "General purpose search engines don't filter results for quality," he says. Do that homework yourself, Salter suggests, by researching sellers on the Better Business Bureau's Web site and reading feedback left by past buyers. Look for clues on the site itself, like certifications from companies that audit online vendors like TRUSTe and Hacker Safe.

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For particularly expensive purchases, Colliers will even call the store. When she found a good price for a refurbished Rolex watch, she called directory assistance to get the seller's phone number. The seller turned out to be a family-owned Florida jewelry store. Colliers talked to the owners about her purchase. "You need to know what you are buying," she says.

Ask a lot of questions, advises Megan Howie, programming director for Time Warner's AOL Shopping. If a site doesn't seem legit to you, it's probably not. No one's forcing you to buy a $1,500 computer at www.joe69sexxycomputer.net. Go to a more established vendor.

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If the amazing deal seems too good to be true, it probably is. It's important to remember that you're not guaranteed to save money online. Hot--and scarce--holiday items like Sony's new PlayStation 3 or Mattel's Elmo TMX can cost more.

Even items that aren't in high demand still shouldn't sell at unreasonable discounts. Software that's discounted 75 per cent is usually counterfeit, says Neil MacBride, vice president of legal affairs for the Business Software Alliance. In general, expect online prices should be closer to 10 per cent or 20 per cent off retail stores' pricing.

Before nabbing that great deal, make sure you read the fine print. Understand the seller's return, exchange and delivery policies, and read the privacy policy to learn how the site will share your personal information.

Now that you've done your homework, it's time to spend. Never, ever send cash to anyone, no matter how good the deal. As soon as the bills are out of your hands, they're gone forever. If sellers don't offer an online payment service, like eBay's Paypal, pay with credit card, not a debit card, if possible: Credit cards give you a chance to review the charges before you pay and dispute them if necessary.

When paying, look for a sign that the website is secure. Encrypted sites show special icons, usually locks, in the browser URL window or the URL changes from http to shttp or https.

After buying save all records relating to the transaction. This way, if there's a problem, you have documentation.

All theses warnings shouldn't discourage customers from shopping online, caution experts. If you shop safely, the risks are minimal, says Howie. "Online has really grown up quickly," she says. "There's really no reason to fight the crowds."

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Lisa Lerer, Forbes