Two Best Defenses Against Online Fraud: Caution and Credit

Whoa, there, cyber-shopper! Before making that online purchase, take a few moments to defend yourself against potential fraud. Do you know the seller? Have you checked out the offer? Unfortunately, as Internet use booms, so too do reports of Internet fraud.

Internet shopping is probably no more dangerous than responding to a telemarketing pitch or a mail-order solicitation. But scammers are beginning to move into cyberspace. Defend yourself with the two rules of online shopping: (1) caveat emptor (buyer beware) and (2) use your credit card.

I know, I know. Everyone warns against using plastic online. But fraud watchers are finding that consumers take this advice too literally. The Internet Fraud Watch, a project of the National Consumers League in Washington, reports that more than 60 percent of victims are paying with cash, check, or money orders.

That's unwise. Once that money is in the hands of a scam operator, it is extremely difficult to get back, says Hugh Stevenson, assistant director of marketing practices at the Federal Trade Commission. At least credit cards offer some protections in case your merchandise never arrives or arrives damaged. If you're wary of giving credit-card data online, legitimate businesses should always offer an alternative: a phone number or address.

If you run into a suspicious offer, check out the Internet Fraud Watch (www.fraud.org/ifw.htm) for tips on what to look for. If you're defrauded, file a complaint online. The Consumers League says it sends those complaints daily to more than 150 law-enforcement agencies in the United States and Canada. Reports are coming in at triple the monthly rate of last year. Since the Internet watch was launched only in March 1996, the increase may be due in part to the campaign being better known. Still, consumers should be careful, especially of the Top 10 online scams reported to the league. These include offers for:

1. Internet and online service (such as free Internet access promised with purchase of software that is never provided).

2. General merchandise (such as sales via unsolicited e-mails or newsgroup postings that never arrive or come damaged).

3. Auction sales (a hot business these days, but consumers complain some sites sell items that are never delivered or use bogus bidders to drive up asking prices).

4. Pyramids and multilevel marketing (old scams revamped).

5. Business opportunities and franchises (such as investments in "Internet malls" or purchases of automatic teller machines that will supposedly be leased back to the seller).

6. Work-at-home schemes (the old "envelope stuffing" schemes in which consumers are told they will be paid for addressing envelopes but actually receive instructions on how to sell others information on how to make money stuffing envelopes).

7. Prizes and sweepstakes (such as winning a "free" trip but having to pay a registration fee and buy a companion ticket).

8. Credit-card offers (often targeted at people with bad credit who are asked for an advance fee for cards that never come).

9. Books (often self-help guides that are never delivered).

10. Magazine subscriptions (discounted, but never received).

Of course, many legitimate businesses offer these goods and services online. To sort out the good from the bad, the league recommends calling state or local consumer-protection agencies to see if the business is registered and whether any complaints have been filed against it. Also, make sure you understand the offer and, if you don't, ask the company for more information. Legitimate businesses will be happy to offer it.

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