A Consumer's Guide to E-Payments
From Donna L Montaldo,
Your Guide to Coupons / Bargains.
"Paying" It Safe
A Consumer's Guide to E-Payments
The Internet has taken its place beside
the telephone and television as an important part of people's
lives. Consumers use the Internet to shop, bank and invest online.
Most consumers use credit or debit cards to pay for online purchases,
but other payment methods, like "e-wallets," are becoming
more common.
The www.ftc.gov Federal
Trade Commission] (FTC) wants you to know about these new payment
technologies and how to make your transactions as safe and secure
as possible. Keep these tips in mind as other forms of electronic
commerce, like mobile and wireless transactions, become more
available.
And how would you like to pay?
Most online shoppers use credit cards to pay for their online
purchases. But debit cards - which authorize merchants to debit
your bank account electronically - are increasing in use. Your
debit card may be an automated teller machine (ATM) card that
can be used for retail purchases. To complete a debit card transaction,
you may have to use a personal identification number (PIN),
some form of a signature or other identification, or a combination
of these identifiers. Some cards have both credit and debit
features: You select the payment option at the point-of-sale.
But remember, although a debit card may look like a credit card,
the money for debit purchases is transferred almost immediately
from your bank account to the merchant's account. In addition,
your liability limits for a lost or stolen debit card and unauthorized
use are different from your liability if your credit card is
lost, stolen or used without your authorization.
New electronic payment systems - sometimes
referred to as "electronic money" or "e-money"
- are also occurring. Their goal is to make purchasing simpler.
For example, "stored-value" cards let you transfer
cash value to a card. They're commonly used on public transportation,
at colleges and universities and at gas stations. Many retailers
also sell stored value cards in place of gift certificates.
Some stored-value cards work offline, say, to buy a candy bar
at a vending machine; others work online, for example, to buy
an item from a website; some have both offline and online features.
Some cards can be "reloaded" with additional value,
at a cash machine; other cards are "disposable" -
you can throw them away after you use them. Some stored-value
cards contain computer chips that make them "smart"
cards: These cards can act like a credit card as well as a debit
card, and also can contain stored value.
Some new Internet-based payment systems
allow value to be transmitted through computers, sometimes called
"e-wallets." You can use "e-wallets" to
make "micropayments" - very small online or offline
payments for things like a magazine or fast food. When you buy
something using your e-wallet, the balance on your online account
decreases by that amount. "E-wallets" may work by
using some form of stored value or by automatically accessing
an account you've set up through a computer system connected
to your credit or debit card account.
The FTC encourages you to make sure your
transactions are secure and your personal information is protected.
Although you can't control fraud or deception on the Internet,
you can take steps to recognize it, avoid it and report it. Here's
how.
Use a secure browser - software that encrypts
or scrambles the purchase information you send over the Internet
- to guard the security of your online transactions. Be sure your
browser has the most up-to-date encryption capabilities by using
the latest version available from the manufacturer. You also can
download some browsers for free over the Internet. When submitting
your purchase information, look for the "lock" icon
on the browser's status bar to be sure your information is secure
during transmission.
Before you provide any personal financial
information to a website, check the site's privacy policy. In
particular, determine how the information will be used or shared
with others and what security features are in place so the information
cannot be obtained fraudulently. If you're not comfortable with
the policy, consider doing business elsewhere.
Read and understand the privacy, refund
and shipping policies of the websites you visit, before you make
your purchase. Look closely at the disclosures about a website's
security, its refund and shipping policies and its privacy policy
on collecting and using your personal information. Some websites'
disclosures are easier to find than others - look at the bottom
of the home page, on order forms or in the "About" or
"FAQs" section of a site.
Keep your personal information private.
Don't disclose your personal information - your address, telephone
number, Social Security number, bank account number or e-mail
address - unless you know who's collecting the information, why
they're collecting it and how they'll use it.
Give payment information only to businesses
you know and trust, and only when and where it is appropriate
- like an order form. Never give your password to anyone online,
even your Internet service provider. Do not download files sent
to you by strangers or click on hyperlinks from people you don't
know. Opening a file could expose your system to a computer virus
or a program that could hijack your modem.
Keep records of your online transactions
and read your e-mail. Merchants may send you important information
about your purchases.
Review your monthly credit card and bank
statements for any errors or unauthorized purchases promptly and
thoroughly. Notify your credit or debit card issuer immediately
if your credit or debit card or checkbook is lost or stolen, or
if you suspect someone is using your accounts without your permission.
Report Problems Immediately
The Fair Credit Billing Act (FCBA) and Electronic Fund Transfer
Act (EFTA) establish procedures for resolving errors on credit
and bank account statements, respectively, including:
credit charges or electronic fund transfers
that you - or anyone you've authorized to use your account - have
not made;
credit charges or electronic fund transfers
that are incorrectly identified or show the wrong amount or date;
computation or similar errors;
a failure to properly reflect payments
or credits, or electronic fund transfers;
not mailing or delivering credit billing
statements to your current address, as long as that address was
received by the creditor in writing at least 20 days before the
billing period ended; and
credit charges or electronic fund transfers
for which you request an explanation or documentation, because
of a possible error.
For credit: The FCBA generally applies
to "open end" credit accounts - that is, credit cards
and revolving charge accounts, like department store accounts.
It does not apply to loans or credit sales that are paid according
to a fixed schedule until the entire amount is paid back, like
an automobile loan.
Under the FCBA, your liability for lost
or stolen credit cards is limited to $50. Notify your card issuer
promptly upon discovering the loss. Many companies have toll-free
numbers and 24-hour service to deal with such emergencies. Follow
up with a letter. Write to the creditor at the address given for
"billing inquiries," not the address for sending your
payments, and include your name, address, account number and a
description of the billing error. Send your letter so that it
reaches the creditor within 60 days after the first bill containing
the error was mailed to you. And if you send your letter by certified
mail, return receipt requested, you'll have proof that the creditor
received it. Include copies (not originals) of sales slips or
other documents that support your position. Keep a copy of your
dispute letter.
The creditor must acknowledge your dispute
in writing within 30 days after it is received, unless the problem
is resolved within that period. The creditor must conduct an investigation
and either correct the mistake or explain why the bill is believed
to be correct, within two billing cycles (but not more than 90
days), unless the creditor provides a permanent credit instead.
You may withhold payment of the amount in dispute and any related
finance charges and the creditor may not take any action to collect
that amount during the dispute.
For debit: The EFTA applies to electronic
fund transfers - transactions involving automated teller machines
(ATMs), debit cards and other point-of-sale debit transactions,
and other electronic banking transactions that can result in the
withdrawal of cash from your bank account.
Under the EFTA, if there is a mistake
or unauthorized withdrawal from your bank account through the
use of a debit card, or other electronic fund transfers, you must
notify your financial institution of the problem or error not
later than 60 days after the statement containing the problem
or error was sent. Although most financial institutions have a
toll-free number to report the problem, you should follow up in
writing. For retail purchases, your financial institution has
up to 10 business days to investigate after receiving your notice
of the error. The financial institution must tell you the results
of its investigation within three business days of completing
its investigation. The error must be corrected within one business
day after determining the error has occurred. If the institution
needs more time, it may take up to 90 days to complete the investigation
- but only if it returns the money in dispute to your account
within 10 business days after receiving notice of the error, while
it reviews your concerns.
If someone uses your debit card, or makes
other electronic fund transfers, without your permission, you
can lose from $50 to $500 or more, depending on when you report
the loss or theft. If you report the loss within two business
days after you discover the problem, you will not be responsible
for more than $50 for unauthorized use. However, if you do not
report the loss within two business days after you realize the
card is missing, but you do report its loss within 60 days after
your statement is mailed to you, you could lose as much as $500
because of an unauthorized withdrawal. And, if you do not report
an unauthorized transfer or withdrawal within 60 days after your
statement is mailed to you, you risk unlimited loss. That means
you could lose all the money in your account and the unused portion
of your maximum line of credit established for overdrafts.
Some financial institutions may voluntarily
cap your liability at $50 for certain types of transactions, regardless
of when you report the loss or theft; because this is voluntary,
their policies could change at any time. Ask your financial institution
about its liability limits.
For stored-value: The FCBA and the EFTA
may not cover stored-value cards or transactions involving them,
so you may not be covered for loss or misuse of the card. However,
stored-value cards still might be useful for micropayments and
other small purchases online because they can be convenient and
- in some cases - offer anonymity. Before you buy a stored-value
card or other form of e-money, ask the issuer for written information
about the product's features. Find out the card's dollar limit,
whether it is reloadable or disposable, if there's an expiration
date, and any fees to use, reload or redeem (return it for a refund)
the product. At the same time, ask about your rights and responsibilities.
For example, does the issuer offer any protection in the case
of a lost, stolen, misused, or malfunctioning card, and who do
you call if you have a question or problem with the card?
Information provided by the Federal
Trade Commission
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