Limiting Financial Risk Online
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Many people are reluctant to make credit card purchases online. There is the valid concern about revealing credit card data to a merchant. With the continuous reports of data breaches, one does not know where or how these personal data are stored and secured.
One way that some people make credit card purchases is not with their every day credit card. Instead, a pre-paid credit card is used. - Now the specific details may change with the financial institution and the country that you are residing. However, the general concept remains relatively the same.
From your banking institution, a set limit credit card is bought. You will have paid for the spending limit on that particular credit card. For example, a hundred dollar credit card can be purchased. The credit card has this set limit and is accepted immediately by the merchants as a valid transaction. Once the hundred dollar limit on that pre-paid credit card is reached, it is no longer valid. The merchant may have your delivery address but, on their data base, the credit card information is no longer valid (assuming that you have reached your prepaid limit). Even if you have not reached your card limit and you have the misfortune of having your data compromised, there is limited exposure to the immediate financial damage that can be done.
Check with your banking institution to see if this service is offered. It is certainly an option to consider if you are making online purchases and want to safeguard your credit information and your privacy.
Catherine Forsythe
Director of Operations
FlyingHamster: http://flyinghamster.com/
[tags]security, data breach, privacy, identity theft, credit cards, catherine forsythe[/tags]
2 Comments
John Major
February 22nd, 2007
at 6:53am
An easier and safe approach, if your credit card company offers it, is a service called Shop-Safe. I log onto my credit card website and generate a unique CC number with expiration date and CCV. I decide how much can be charged against that CC number AND Shop-Safe will only allow one mechant to charge against that CC number. So I create a unique CC number for every purchase I make. You can also create re-occuring charge card numbers were a specific amount of dollars can be charged each month for a specific amount of time, like for netflix or other re-occuring CC charges.
On my credit card statement, everything looks as if it was charged using my regular card, but the vendors never see my real card number.
There are 2 potential points of security breach: one is my credit card companies website - I don’t have complete faith in them but you have to trust someone - or deal only in cash; and second is my own computer, is it infected with malware, spyware, keyloggers, etc.? That I do have control over and practice safe web surfing, emailing and have the proper security in place.
-John
dirtgoddess
February 22nd, 2007
at 12:39pm
The method we use is one outlined in my husband, Don Crowder’s piece, eCommerce For The Masses, here on the Nexus;
http://snipurl.com/19mbz
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Get a PayPal account and open a second checking account to use with it. Decide up front on the maximum amount you’re willing to lose in the event you make a catastrophic error; let that amount be the limit on how much you’ll allow to reside in your checking and PayPal accounts. I personally keep the combined total balance of my PayPal and associated checking account below $300; if I get suckered into revealing sensitive information to a phishing scam, the most I’ll lose is $300. Think of the fees for your second checking account as the “Insurance Premium” you pay to limit your losses.
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We also use this account when ordering over the phone. If we need more in the account, our bank allows us to transfer funds from one account to the other, and I’d rather keep my account information confined to my bank’s records.
Lisa Miller