Precautions for shopping online

Even though he once had his credit-card and account information stolen in a huge hacker download, Tom Arnold says he's not paranoid about shopping online. But he's not stupid about it, either.

"If you look at the history of the technology-enhanced crime we've seen since 1994, it has gone from thrill-seekers to highly organized crime. It is definitely an increasing problem," says the Internet fraud expert and chief technical officer of CyberSource Corp. The San Jose, Calif.-based company that develops and provides e-commerce transaction processing services, including fraud prevention, to online merchants such as Wal-Mart, Barnes & Noble and Home Depot.

While the threat of fraud and identity theft hasn't stopped consumers from shopping online, surveys find people are hesitant to give information out online. In a survey conducted earlier this year by cPulse, the Internet Satisfaction Monitor, 89 percent of respondents said they're uncomfortable providing credit card information online and 49 percent said they weren't comfortable with the overall issue of online privacy.

Online fraud has multiplied not only in numbers but variety, warns Arnold. One common scheme is the supposed merchant who sells a product and then doesn't deliver. But online fraud goes beyond that kind of old-fashioned scam: One high-tech fraud, sometimes called "IP spoofing," clones complete Web sites, he says, "with the intent only to acquire the identities of the people shopping and then use those identities illicitly.

"On the other side, there are also merchants we've seen on some of the adult Web sites where the sole purpose is to steal the information and names."

Meanwhile, technology to combat online fraud is being developed almost as fast as the fraud schemes. Arnold's company currently provides online merchants a service called the Internet Fraud Screen that scores orders by indication of potential for fraud. While there is no such technology yet to protect consumers, says Arnold, there are steps a consumer can take in any online transaction to minimize the risk of getting ripped off. They include:

-- Always use a secure Web site when you provide credit-card information to buy online, Arnold says. "Sometimes the secure sites aren't even secure. If you go to a secure site, the little lock or key on your browser will go solid. Click on it and check the certification of the security to make certain you are dealing with who you think you are dealing with."

-- Use a credit card online and not cards that debit directly from banking accounts. Credit cards provide a certain protection from fraud. "In these card-not-present transactions, if something goes wrong, you basically contact the bank who issued the credit card and you are protected," says Arnold.

-- Report problems to the Federal Trade Commission (877-382-4357). "If there have been actual victims of fraud, they need to report that to the credit-card company and to the Internet Fraud Complaint Center" at www.ifccfbi.gov, the FBI's online fraud site, he says.

"The last thing I tell consumers is to think globally out there," adds Arnold, "and don't believe everything you read online."