Financial Writing: Scam Proof your Internet Sales/Purchases

I recently had someone contact me to purchase some items from my art website. He said he wouldn't use PayPal or a credit card as he had had a previous bad experience because of giving an unknown person this information. His paranoia sounded reasonable enough to me. This problem got me thinking about how one could safely purchase things on-line without exposing all of your credit card information – even to a reputable conduit such as PayPal or other sites like it. You are still required by them to present your credit card or bank account numbers – which makes one feel a bit queasy, given the rapid increase in scams and fraud on the Internet.

Under no circumstances should you accept Cashiers Checks for the purchase of any item on-line. Fraudulent checks may initially be accepted and cleared by your bank. FDIC regulations in fact require it and the criminals know this. You go ahead and complete the transaction thinking all is well. Weeks later you are informed by your bank that the check was a forgery and that you are now liable for the entire amount originally credited to your account. You have then been defrauded of your merchandise and also of cash as you paid for the shipping of the items in question.

I've come up with a good solution for all concerned. Why not get a “Prepaid” credit card from your card company or bank – you pay upfront for the amount you want – say $500.00 – and use this card exclusively for all purchases done on-line. Keeping the pre-paid amount low is additional insurance. You thus compartmentalize the damage that could potentially be done if your card information is compromised. You can “refill” the card as needed. The more I think about it, the more I like this as a secure solution to on-line purchase or sales transactions.

In addition, this solution could also put a cap on how many of those on-line monthly automatic charges we forget that we signed up for. By using a regular open ended credit card, many of which have large credit lines, they have unlimited access for on-going charges each month, usually until your card expires – which in some cases can be as much as 4 years.
The pre-paid card will also work well for those with bad credit or no credit and allow them to rebuild their credit histories over time. The pre-paid credit card also has the added benefit of requiring us to pay, in cash, for things we need. Much better for budgeting and being aware of our spending habits.