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Debunking the e-commerce theft myth

If so many people are scared of buying things online, why don't we hear of cases where credit card numbers are stolen?

Visions of dollar signs are dancing in the heads of online retailers and e-commerce analysts, salivating at their expectations that this will be the first true Internet Christmas.

But they're banking that consumers are no longer too scared to use their credit cards on the Net, and that's no sure thing. Consider two estimates from Internet market research firms:

  • 99 percent of Internet purchases are made by credit card, according to recent figures from Jupiter Communications.

  • 40-plus percent of online users say they aren't buying online because of security worries, generally about the safety of putting their card numbers online, according to a Forrester Research study early this year of 120,000 U.S. households.

    "It is absolutely a perception problem," said Forrester online retail analyst Kate Delhagen, who can't name a single case where a consumer's credit card has been lost while traversing the Internet.

    Call it the biggest Internet commerce myth ever, this widely held but nonetheless false belief that credit card numbers are swiped as they cross the Internet, then used fraudulently.

    Or call my bluff. I'm issuing a challenge to readers, the same one often put to me by e-commerce companies: Name one person that has happened to.

    Send me verifiable details of any single case in which a credit card number was stolen in transit over the Internet. I'll check it out and eat crow if I must.

    Obviously, that won't prove that thefts never happen, but until someone can cite a case, it's hard to take the threat seriously.

    Then enterprising folks like William Cherryhomes, owner of a computer store in Jacksboro, Texas, (population 3,500), won't have to come up with security workarounds. Last week he emailed his approach for safer purchasing on the Internet: Get a credit card with a $300 limit, meaning the maximum loss is $300.

    "Who cares if that one gets ripped off?" said Cherryhomes, who also ranches on the side.

    The idea is not only novel but absolutely unnecessary.

    Visa and MasterCard cardholders are responsible for only $50 of a fraudulent charge no matter what the circumstances and no matter how large your credit limit. Visa cardholders who report a questionable online purchase within 48 hours of learning about it pay nothing.

    And it's not just the card companies offering the $0 liability on disputed charges. Online merchants like Amazon.com, Disney, Music Boulevard, Travelocity, iMall, and Shopping.com also will cover the $50 charge, because they think they'll never have to.