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5 ways to protect your finances while online shopping this holiday season

December 22, 2022, 4:57 PM UTC
Photo illustration of a laptop with a padlock locked at the top.
These scams don’t just happen around the holidays. Fraudsters can get creative year-round.
Photo illustration by Victoria Ellis/Fortune; Original photos by Getty Images (3)

If your favorite part of the season is kicking back and adding items to your cart—you’re not alone. According to the National Retail Federation’s forecast for the 2022 holiday season, online and other non-store sales are expected to increase between 10% and 12% to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year, which saw a significant boost from consumers who were taking precautions against COVID-19 by staying away from crowded brick-and-mortar stores. 

The downside: Online shopping can pose its own risks. Especially if you’re not keeping a close eye on your transactions. 

How common is fraud while online shopping? 

In 2021, more than one in three U.S. adults received fake shipping notifications or experienced fraud buying a product through an ad online, according to an AARP survey

The two most common types of scams, according to the FBI, are nondelivery and nonpayment scams. A nondelivery scam is when a consumer pays for goods or services they find online, but never actually receives those items. A nonpayment scam involves goods or services being shipped, but the seller is never paid. A 2021 report from the Internet Crime Complaint Center found that nonpayment or nondelivery scams cost people more than $337 million. Credit card fraud accounted for another $173 million in losses.

These scams don’t just happen around the holidays. Fraudsters can get creative year-round. 

“They’ll tailor the messages to the specific situation, whether it’s back to school, Valentine’s Day, or there’s some type of charity because of a natural disaster,” says Mike Steinbach, head of fraud prevention at Citi Personal Banking and Wealth Management. “Any incoming communication—whether that’s a knock on the door, physical mail, a phone call, an email, a text message—could be fraudsters relying on customers to reply to complete that cycle. What we want to do is tell the customers [to not] allow them to complete the cycle—cut the connection.” 

5 Ways to protect yourself from fraud  

Online shopping can be a convenient way to make sure you cross everyone off your list and rake in extra savings with online-only deals and discounts. It can also be a huge time-saver. There are a few steps you can take to protect yourself and your finances while shopping online: 

  1. Do some research on the merchant before making a purchase. Before you make a purchase, do some digging to verify that the merchant you’re purchasing from is legitimate. Search online for the product or company name to read online reviews and see if you can find any information about recent complaints or scams related to that merchant. You can also contact your state attorney general or local consumer protection agency to ask them if there are complaints on file. “Stick with websites that are known,” says Steinbach. “If the customer is going to follow a trail that is a ‘too good to be true’ offer [like] a 70% off or 80% off, that customer should do some research as to that website and retailer. Go online, check the Better Business Bureau, because oftentimes those ‘too good to be true’ websites are just that.” 
  2. Consider installing antivirus protections. Your phones, tablets, and computers are all susceptible to malware and viruses. Fraudsters can use this to their benefit to hack into your devices and collect personal information like your passwords, auto-fill settings, search history, and more. This can help them gain access to your saved payment information and make fraudulent transactions. Installing antivirus protection can protect your data from certain scams by quickly detecting and removing viruses and other kinds of malicious software from your devices. 
  3. Don’t click on any suspicious links, email attachments, or downloads. Scammers may try to gain access to your personal information by sending you links or attachments that require you to submit additional personal information after you’ve made a purchase. Don’t interact with any of these phishing attempts. If you have questions, or are unsure if the message you’re receiving is real, contact the merchant directly through a verified contact number or email. 
  4. Keep tabs on the shipping process. When you do make a purchase, be sure to double-check that you’ve received a confirmation number and/or tracking number so that you can be sure that your payment went through and your item is on its way to you. Be wary of any suspicious messages that contain a fake tracking link or ask you to select a new delivery date or provide additional personal information.
  5. Set up transaction alerts for your bank account or credit card. Many banks offer the option to be notified each time a transaction is made from your account. This can be an instant way to spot a fraudulent transaction. “In addition to those alerts, check your account transaction history frequently,” says Steinbach. “If you’re doing a lot of online shopping, get on there every couple of days. Check the transaction history based on what you know you did so that if you do see suspicious activity, you can alert your credit card or your bank or your credit union very quickly.”

The takeaway 

As you’re making purchases for your friends and loved ones, it’s important to be vigilant and take the proper precautions so that your personal and financial data isn’t compromised. Pay close attention to the merchants you’re giving your money to, frequently monitor your transaction history, use secure and verified lines of communication with the businesses you’re shopping from, and immediately report any suspicious activity to your financial institution.  

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