This article by Stuart L. Adams, Jr. appeared in the 

Louisville Computer News

Avoiding Online Shopping Ripoffs

December 1999

This year, many shoppers will be letting their mouse do the walking, as they shop online for the first time. The Better Business Bureau Web site posts a statistic from a report by major accounting firm, Deloitte & Touche, stating that consumers will spend about 20% of their holiday budget online this year. The American Bar Association predicts that online shoppers will spend an estimated $9.5 billion shopping on the Internet this holiday season. That’s three times the estimated purchases last year during this period. If you think that’s a jump, some experts estimate this number will increase to $75 billion by 2003.

These numbers might indicate that online shopping must be safe and worry free. A National Consumers League survey indicated only 10% of online shoppers surveyed seemed to be concerned with online fraud, but the League feels the danger to be greater online than with garden variety credit card theft. Case in point, Thomas Vertanian, chairman of the ABA cyberspace law committee found, on his first online purchase in 1997, that there are some dangers. According to an article posted by Wine Press (don’t ask, me it was a hyperlink on one of my online news services),, Mr. Vertanian tried to purchase a Chicago Bulls souvenir online (keep in mind that the ABA headquarters is in Chicago), but ten days after receiving the product, he was notified that his credit card number was one of 2,000 stolen from the site.

Revenge can be sweet. Recently, Mr. Vertanian was one of those unveiling a new Web site,, created by the ABA to give some common sense tips and legal advice for online shoppers. The site, which is backed by a number of consumer groups, is one of several which have sprung up recently in response to exploding problems of online fraud, including identity theft, which I’ve talked about in greater depth in previous articles. Online auctions appear to account for something like 90% of the complaints about online transactions. The National Consumers League site has a separate section with special tips for avoiding online auction problems at

Other online shopping tip sites include those of the Better Business Bureau,, the National Consumers League’s National Fraud Information Center,, as well as the ever popular Federal Trade Commission site,, which has a number of articles on online and telemarketing fraud. You can also get a copy of the BBB tips via snail mail for $2.00 by sending a self-addressed stamped envelope to CBBB Publication Fulfillment Department, 4200 Wilson Blvd., Arlington, VA 22203, or free online at

There are a number of places online to report online fraud. The FTC online complaint form is found at The National Fraud Information Center form is found at, and fraud can also be reported by phone at 1-800-876-7060. The Center promises your report will be relayed to appropriate federal, state or local law enforcement agencies and transmitted to the National Fraud Database, which is maintained by the FTC and the National Association of Attorneys General. If you’d like to shop online this holiday season, or beyond, but not become a statistic in the National Fraud Database, read on.


Remember that a slick Web site doesn’t necessarily equate with an honest site. The "Furby fraud" of last holiday season is cited as a perfect example by ABA president, William Paul. According to Paul, one lady is still waiting, a year later, for the arrival her grandson’s hot "new" toy. This problem has become so severe that one major insurance company has started offering a policy to cover it.

Much of the advice at these sites boils down to common sense. You wouldn’t expect to get much of a warranty if you bought an "expensive" watch from a guy standing in a dark alley, who pulled up his sleeve to display his Rolex selection. Did you know, however, that there is a difference between using a credit card and a debit card online or elsewhere?


Mark Budnitz, a Georgia State law professor quoted in the Wine Press article, states that credit card holders are responsible for only the first $50.00 of purchases racked up by someone who has stolen their credit card number off the Internet. On the other hand, if you don’t report fraud in the use of your debit card within two days, Budnitz says you can be liable for up to $500.00, or, if not reported within 60 days of the fraudulent purchase, up the max limit on the card. Given the lapse of time between fraudulent use and discovery when the debit card statement arrives and is reviewed in detail, it could be easy to miss either deadline.

Budnitz is likely referring to the intended protections of the federal Fair Credit Billing Act. For more information, and some of the big exceptions to the previous paragraph, look at the FTC site,, which was produced in cooperation with AARP and the Direct Marketing Association. Despite the title, much of the article there, Shopping by Mail or Phone, also applies to online shopping. It would also benefit you if I’ve now scared you enough to make you revert to mail or telephone orders.


Some basic "common sense" tips for online shoppers are listed at the BBB site. They include:

Get the merchant’s physical address if you’re not familiar with the company. If the physical location is outside the U.S., what do you really think your odds are of resolving a dispute to your satisfaction?

Find out what the merchant’s customer satisfaction policy is before you order. If it’s not easily obtainable online, start to get suspicious.

Protect your passwords. Never give your Social Security Number, mother’s maiden name, your bank account number, or your Internet account password. Use a different password for each vendor, so if one is hacked, it cannot be used to access your accounts with other online merchants.

The BBB recommends you look for their BBBOnLine Reliability seal. For details on this program, as well as the intended impact of their Privacy and Kid’s Privacy seal, you can visit

Start with a small, inexpensive purchase first, if you are unsure of the merchant.

Always use a secure browser, which uses encryption to scramble your personal and financial data.

Verify the "URL" or Uniform Resource Locator of the vendor, which is the Internet address you plug into your browser to go to the site. Some online crooks use an Internet address which is deceptively similar to a real merchant’s Web address, and in many cases, more logical than the real one. Compare your potential vendor’s address to what you find by alternate means, such as Domain names listed at

Keep a paper trail of any transaction, including printing out any shopping cart "checkout" page that has price or order number information, e-mail confirmations, as well as the URL of the vendor, so you can at least report where the site was.

Know your online shopping rights. They are certainly not identical to those you may be used to at your corner store.


If you don’t know your rights, or for much more detailed advice, of course, visit the American Bar Association online shopping tip site, listed above. It too, contains common sense advice, like make sure you’re really getting the best price. Many people seem to be more susceptible to the belief they are getting the best deal at a particular Web site because of the effectiveness of the multimedia glitz there, than because they compared the results of their price checks of other merchants. Make sure the final price to you is the lowest. Often, the base price of the item grows differently at different sites, when you add the vendor’s selected shipper’s charges, or, heaven forbid, a restocking fee on your return.

Some of the tips suggested at the ABA site include:

Consider getting a separate credit card to use only for your online purchases. That way, the ABA suggests, both fraud and honest errors may be more easily and quickly discovered than if buried in your "long" list of charges on your other 85 credit cards.

A Federal Trade Commission rule states that a vendor must reasonably believe it can deliver a product within the time frame it tells the customer. If no time frame is stated, then the rule "presumes" the vendor will deliver the item within 30 days, unless it is C.O.D., and violation can result in penalties of up to $10,000.00 for the merchant (if the FTC can find them). Be sure a delivery period is specified or shop around a little more.

Make sure you understand and print out all the "terms" of the transaction. I also suggest, if you’re too cheap or skeptical to actually print them out, that you create something like a "C:\shoppingfool" directory on that new 8 gazillion Gig hard drive you bought online earlier this year, and at least save a copy there, so you can retrieve it later if you get ripped off. Save the file containing the online pages to this directory under the name of the product you were trying to buy, such as "Impulse-Item-99," so you can find it easily. The file creation date may also corroborate the date you ordered, in case you forget. Some of those terms to check for are:

What are the seller’s shipping, return and refund policies? Is there a flat shipping fee, a per item fee, a combination, or formula?

Can you return an item to a retail outlet for cash or credit?

Can you return an item which you have opened?

Is there a restocking fee (which for some vendors now runs several percentage points on the purchase price)?

Does the seller charge your account when you order or when the item is shipped?

If you order multiple items and some are shipped separately, such as in the case of an out of stock item, will you be charged additional shipping fees?

A written warranty should be provided to you before you purchase. If there is one, is it full or limited? Do you know the difference? Has the seller attempted to disclaim any warranties with words such as that the item is sold "as is" or that the seller "disclaims the implied warranty of merchantability?" Is there a dollar limit on repairs? Is the warranty limited only to repair or replacement, even if the product has caused damage, such a fire or personal injury?

What legal action, if any can you take in the event of a dispute? You might contract away your right to sue and be required to arbitrate or mediate in some remote location, including a foreign country. Will the law of some other jurisdiction be applied? What is the time limit on taking action before you can no longer pursue a legal remedy?

If the item is shipped via a "common carrier," such as a trucking company or airline, will there be another party you will have to pursue if the item is dropped, crushed, spindled or mutilated before it arrives? Are there limits on the liability of the common carrier? I never cease to be amazed how hard it is to tag a trucking company with the full value of what they drop off the back end of the semi. They never seem to have an office in the home state and they always seem to have some document that severely limits what they will have to pay, if you eventually prove it was their fault.

Of course, there are privacy concerns. I’ve written a number of articles about this subject in previous editions of this newspaper, but see if there is a privacy policy conspicuously posted as soon as you log onto an e-commerce site, as well as a notification that the site is monitored by an independent organization (usually a good thing). Most sellers today love to send you "cookies." These are small files some Web sites send to you when you log on to the site. They deposit themselves on your hard drive and can be used by the seller to tell when you visited the site, what you looked at there and for how long, etc., under the expressed theory that this allows the seller, the next time you visit the site, to pass you through their general home page material and take you more directly to areas you seem to have an interest in. This is supposed to be a good thing also, but can lead to privacy problems, as also described in prior articles. Needless to say, these cookies can be much more invasive than advertised, and the information could be used for less than honorable purposes. You can probably change your browser settings to prevent it from allowing this to happen, such as by going to the "edit" and then "preferences" pull down menu in your toolbar in Netscape Navigator™, or the "options" then "advanced" menu in Microsoft Internet Explorer®. You can also delete all those "stale" cookies already on your hard drive. In Windows 98, for instance, click on "Start" on your toolbar, then "find," and then "Files or Folders." Then type in "cookie" in the "named" box and click on "find now." You might be surprised how full your cookie jar already is.


I’ve tried in this Article to help you figure out how not to give your money away by accident or fraud. Since this is the season when many of us, hopefully, think about giving to those less fortunate, there are also some tips on how to avoid mistakes in that direction. The Council of Better Business Bureaus has recently released a free, special Holiday Edition of its newsletter, "Give but Give Wisely," which offers tips on holiday "charity" chain letters, "charity" online auctions, and other gimmicks which look like they come from reputable charities, but are really just another scam propagated by online hustlers. This information can also be located through the Web site at

The odds seem to indicate you will shortly order something online. If so, my wish for you this holiday season is that this Article will help you do so more safely, securely and wisely.