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    New York Times: Reducing the Anxiety of Paying Online

    Many people are concerned about making online payments. There’s a fear that bad Internet security would lead to personal data being breached and the possibility of identity theft or fraud. The New York Times has an article about the risks and benefits associated with various online payment systems:

    Deciding which online payment method to use would seem to be a simple matter of picking whichever offers higher security. But the wise consumer also weighs the legal protections in the case of theft: the best security and the lowest liability don’t necessarily go together. […]

    There are a few precautions everyone should take. First, look for signs of quality security at sites you use, like logos, or seals, from security providers like VeriSign and McAfee, said Aleksandr Yampolskiy, director of security at the luxury shopping site Gilt Groupe. To check that a seal is legitimate, click on it to make sure it takes you to the verification page of the security service.

    Also make sure that “https” appears in the address bar, because that indicates that digital transmissions from the site are being encrypted, Mr. Yampolskiy said.

    Security seals, however, are just a starting point, not a guarantee a site is secure. They affirm only that it has met specific criteria set by that security service. And the lack of a seal doesn’t necessarily mean a site is risky. So use common sense when deciding which merchants to do business with. […]

    Now that you are frightened enough, here’s the good news about online payments: There is little to worry about using credit cards online, because the risk of loss from unauthorized charges, by law, is almost nil. […]

    Under the Truth in Lending Act, consumers’ maximum liability for unauthorized use of their credit card is only $50, and when a card is used online, it’s zero.

    If you report fraud quickly, banks will typically reverse the charges rapidly and without much fuss, though in these tight times banks are scrutinizing fraud claims more closely, says Avivah Litan, a payment-fraud expert at research firm Gartner.

    The article also discusses the costs and benefits of debit cards and payment services such as PayPal, Google Checkout and BillMeLater.

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