How to protect yourself when making purchases online.
Here's a typical question I get asked alot:
Is there a payment service that protects the buyer? When I first heard of the idea of a third party service for buying and selling on line, I assumed that the third party held the money until the buyer received the product, or took responsibility for the seller. Really where is the risk for the seller? The seller can hold the merchandise until they get the money. The buyer is taking the bigger risk - not a thing happens until they have sent the money. Buying on line makes me very nervous because I always wonder if the merchandise will truly come.
Tips for purchasing online
You should be cautious. The main thing you want to do when you buy online is do a "whois" search to see how long the merchant has been online. You just go to Internic & put in the domain name of the merchant and it will tell you when the domain was registered. (No www, no http, just the domain. For example yahoo.com, PayPalSucks.com, etc.) In almost every case I know, the scammers will register a domain within a few months of starting their criminal activities. If the domain is at least 1 year old, it's a good indicator it's legit. If it's 2 or more years old, I usually don't worry too much. (Of course there are people who buy an established domain for the purpose of scamming, but that's rare.) I don't do business with anyone who's domain is less than 1 year old. The link above to Internic will just give you the date of registration. If you need more info on a domain name, see my links on the Research Tools page.
Go to your favorite search engine and type in the domain of the place you want to buy from. Look to see what comes up. If you get to a lot of pages where people are complaining, that's not a good sign.
Check their link status. Go to: Marketleap and enter their domain mame and it'll tell you how many other people are linking to that site. (They have 4 boxes, so try www.domain.com, domain.com, etc) Again, it's not a fool-proof system, but if a lot of other people are linking to them, it's probably a good sign. (Google is tough, so if you see 10 links on Google, that's decent. On MSN 20 links is pretty good. Whereas 100 on "AllTheWeb" is very easy to do.)
You can also check their Alexa (now Amazon) feedback (not everyone has feedback, so this is limited in scope.) Go to Alexa and type in the domain of the merchant and you'll see their feedback rating (1-5 stars, if one exists.) For instance you can check our site's feedback . (Scroll down to see it.)
Unfortunately Alexa has made it more difficult to use and find feedback since Amazon bought them. I wish they'd go back to the old system. But you can just go to Alexa and enter the url, then over on the left look for "customer reviews" (if there are any) and that'll get you going. :-)
You can go to the company name sucks.com website if one exists. Ie, if you are buying from "joeshardware.com" type in http://joeshardwaresucks.com and see if there is a site there. Only effective a little bit, but it's just another tool you can use.
You can send a postal money order. While that doesn't exactly apply to this question, I add it because if you send a US Postal money order and the person doesn't send the merchandise, then that's mail fraud, and the postal authorities will investigate and prosecute them.
There is something known as an "escrow service." An "escrow service" is where you send the money to them. They notify the merchant they have your money. The merchant then sends the item. When you get it, you notify the escrow company it's okay to forward the payment to the merchant. Usually only used for large ticket items, but MoneyBookers offers this service to it's members for a 2% fee. They are reputable. Also, escrow.com is good, but more expensive. However, watch out for fraudulent escrow services. They are all over the net. I believe most states regulate escrow services, usually under banking law, so you can start there.
Also see the "official" rules for credit card disputes as presented by the FTC.
There is a lot of risk to both the buyer and seller with online purchases. Most buyers assume they are the ones at most risk but really it's the sellers who have the greater risk because while you do 1 or 2 transactions a week, they do 1000, 10,000 or more a week. Most "normal" people have no idea how bad fraud is on the net, because they are "normal" and not criminals. But to sellers.... it's a whole different ball game. Three years ago, some merchants reported up to 30% of all their online purchases were fraud. Today that number is down to 1% to 10%, depending on the merchant. Offline purchases are well under 1%. Also, there are a lot of laws and government authorities in place to protect the buyer. Most government authorities consider those in business to assume the risk of fraud, and therefore don't do much. Especially since they are spread out. Ie, one merchant may have 20 fraudulent orders from 20 different people. The cops aren't going to put resources into tracking down 20 different people. The only time they get involved on the merchant's side is when 1 person or group of persons defraud hundreds of businesses. Then the FBI is pretty good at trying to do something, but only if it's over $250,000 lost. However, most small cases will not be taken seriously. You will have to contact the police in the local of the bad person and file a report. Sometimes it has good results. See Help.