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Using Credit Cards Online

You've seen the headlines. "On-Line Security a Pipe Dream?" "Netscape: Internet Security Flaw can be Fixed." "Visa, MasterCard Aim to Protect Internet Credit Card Buys."

You could easily conclude that hackers surreptitiously purloin credit card numbers from the Internet every day. According to Mike Homer, a vice president of Netscape, "The truth of the matter is that we have had over eight million customers doing business for almost a year now on the Internet. During that time we've never had a report of any of our customers' information being stolen."

David Renard, a research analyst with The Gartner Group, a well-known information technology consulting firm, bolsters the conclusion that the Internet is safer than the press would have you believe. He says, "The banks that I have talked to have never seen a credit card number stolen during an Internet transmission."

Even MasterCard agrees that it's more a theoretical than real problem. According to Dorea Smith, Director of Global Communications for MasterCard International, "I don't think (credit card fraud on the Internet) is big."

This article will explain the worst-case-possible legal scenario if you are that rare but unlucky victim of Internet credit card thief. Then it will expose the unwarranted paranoia about credit card commerce on the Internet. Once the issue is examined closely, it becomes clear that this is a media scare being hyped by the press and perpetuated by computer-phobics. Now, don't get me wrong. I'm not saying that the Internet is a perfect environment for credit card commerce. Clearly, the Internet requires increased security, illustrated in the doomsday movie "The Net;" in which Sandra Bullock's identity is stolen via the Internet. Hollywood exists to create bogeymen, and in this decade it's the computer. However, such paranoia concerning the use of credit cards on the Internet is a red herring.

It's All Relative

The concept of security is a relative term. What you try to achieve in life is reasonable, not perfect, security. After all, you let your children leave the house, don't you?

You probably don't think twice about giving your credit card number to a minimum-wage telephone salesperson who may keep their own private copy of your credit card information.Every clerk who takes your credit card in every store is a potential credit card number thief. And it gets even worse. Every person who works in that store right down to the cleaning crew could steal your credit card information. Since you never really know who has access to your original credit card paperwork, why do you feel content to tear your carbon into four pieces (there you stand-the human shredder) and then return it to the clerk to throw away? If you stop and think about it, some of your behaviors have nothing to do with quantifiable risk reduction.

Still, you proudly proclaim that you never transmit your credit card information over the Internet. You probably don't do it because you envision some pimply hacker-genius snatching your credit card number right out of cyberspace. Yes, it could happen, but, again, it remains more of a theoretical than real risk. The scare headlines that you read refer to the possibility of large- scale fraud, although that too has not really happened yet. When it does, the press will certainly let you know. For now, though, the trash bin outside the last place you used your credit card should concern you more than the Internet.

It seems that computers have replaced nuclear radiation as the bogeyman in our society. Think back to the 1950's. Do you recall the movie genre that had nuclear energy creating oversized, grotesque monsters like giant spiders and building-size reptiles? Hollywood jumped on public fear of the new and unknown. In the 1950's, it was nuclear energy. Today, it's computers.

Addressing these concerns in early February, 1996, MasterCard and Visa jointly announced a technical standard for safeguarding credit card purchases made over the Internet. Other participants in this effort include IBM, Microsoft and Netscape. This five-star group will likely become the standard-setter for the credit card industry.

This new standard, known as Secure Electronic Transactions (SET), is based on specially developed encryption technology. In essence, SET will encrypt (code) your confidential data before transmission over the Internet. It will take a secret "key" to decrypt (decode) your information at the other end.

You Already Have Legal Protection from Credit Card Fraud

Even if you are unlucky enough to be among the first victims of that legendary hacker from hell who snatches your credit card information out of cyberspace, it's not the end of life as you know it. In 1975, Congress passed the Fair Credit Billing Act (FCBA). Although not specifically designed for Internet related credit card fraud, it provides all the protection you need. It's one of those rare laws that works.

If you follow FCBA's procedures, your maximum liability for unauthorized use of your credit card is limited to $50. The banks even have a secret gift for you here. If you're a good customer, most banks routinely waive the $50. The goodwill that they gain by waiving collection of this nominal charge is more important to them than the $50. In relieving you of responsibility for fraudulent credit charges, the law dictates that you must first, and most importantly, send your creditor a written billing error notice within sixty days of receiving the first bill which contained the error. If you fail to take this step, you may be deemed to have waived your rights under FCBA. If you look on the back of any credit card bill, you should see a full summary of FCBA and its procedures. Follow these procedures and your loss, if any, will be minimal.

It's Okay. Use Your Credit Card

This all comes full circle. First, nobody has seen any significant amount of Internet related credit card fraud. The press has only reported the potential for a problem, not actual examples. Second, there is FCBA. It effectively reduces your risk to, at worst, a $50 loss.

Looking at these two facts, singling out the Internet as dangerous for credit card use seems phobic. The risks on the Internet do exist, but similar risks are there every time you expose your credit card to the light of day. The point is, that the Internet does not deserve the unsavory reputation given to it by the press. Go ahead. Take a chance; use your credit card on the Internet. Your credit card is in no more danger on the Internet than in any other place that you routinely use it.



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