Online Shopping Fraud Prevention: Safer Habits To Avoid Getting Tricked by Bad Actors
In 2024, online shopping fraud was the second most reported type of fraud in the U.S., resulting in $432 million in reported losses[1]. This makes online shopping fraud prevention crucial for staying ahead of increasingly sophisticated scams and avoiding financial losses.
This article explores what online shopping fraud is, what to do if you’re targeted, and how to protect your financial information with smarter habits and tools like virtual cards.
What Is Online Shopping Fraud?
Online shopping fraud (also sometimes known as e-commerce fraud) refers to deceptive practices where fraudsters trick you into paying for goods or services that are counterfeit, misrepresented, or don’t exist at all.
Here are some common types of online shopping fraud you should know about:
- Fake e-commerce stores—You pay for products on a convincing fake website, but nothing ever arrives.
- “Evil twin” checkout page—Hackers inject malicious code into legitimate websites, redirecting you to fake checkout pages that mimic the real site and steal payment information.
- Account takeovers—Hackers take over your online store accounts to access saved card details and make unauthorized purchases.
- Counterfeit product sites—Scammers create stores that advertise branded products, but send unauthorized replicas after making a purchase.
How Online Shopping Fraud Can Affect You
Financial loss is the most apparent consequence of falling victim to online shopping fraud. However, this type of fraud can impact you in other ways:
- Theft of sensitive data, such as credit card numbers, can increase exposure to more sophisticated scams like triangulation fraud.
- Trying to recover stolen funds or disputing fraudulent charges can cost you time and effort.
In certain circumstances, you may be able to lessen the impact of online shopping fraud involving unauthorized transactions on your credit or debit card with these legal protections:
What To Do if You’re Already a Victim
If you’ve made a purchase and have reason to suspect fraud, you can contact the retailer directly to try to resolve the problem. If that doesn’t help, or if you’re sure you’ve been a victim of online shopping fraud, consider the following steps:
- Dispute the charge through your bank, card issuer, or payment provider, such as PayPal, Cash App, or Chime.
- Freeze or close your card immediately if you notice any unauthorized charges on your statements.
- Report the online shopping fraud to the authorities, such as the Federal Trade Commission (FTC)[4], the FBI Internet Crime Complaint Center (IC3)[5], or the Better Business Bureau Scam Tracker[6].
How Can You Protect Yourself From Fraud When You Are Shopping Online?
Shopping online safely requires being aware of potential fraud and minimizing your exposure to bad actors. Here’s how to protect yourself from getting tricked:
- Investigate before you buy
- Recognize the signs of a fake online store
- Use secure and trackable payment methods
Investigate Before You Buy
Before shopping at a new online seller, research them thoroughly. You can check for customer reviews across multiple platforms (Instagram, Google, Reddit), and search their name with terms like "scam" or "complaints." Watch out for sellers with a small number of reviews or overly polished five-star reviews posted within a short timeframe.
You can also check how long the website has been in operation. Scam sites often appear right before peak seasons and disappear just as quickly. You can use tools like WHOIS[7] to verify domain age or the Wayback Machine[8] to see what the site looked like in the past.
To avoid any potential misunderstandings, you can verify where the store is based and read their return or exchange policies. Return policies and dispute resolution processes may be more complicated if items are shipped from overseas or the business is operated internationally.
Recognize the Signs of a Fake Online Store
Scammers go to great lengths to create realistic-looking websites or product listings, but they often leave behind clues of their fraudulent purpose. Watch out for these common traits of a fake online store:
- Unrealistically low prices—If a shopping site lists a product far below its market value, it may not be a legitimate store, or the product could be counterfeit.
- Brand new social media account—A recently-launched Instagram or Facebook shop offering deep discounts and little background info might be worth questioning.
- Suspicious URLs and website errors—Check for slight misspellings in URLs and avoid sites with broken links or poor grammar. Also, a website without a secure connection (missing HTTPS or padlock symbol in your browser’s address bar) should be avoided.
- Lack of merchant information and unclear policies—Reputable online retailers are transparent about return policies, terms of service, and contact details. A lack of this info is a red flag.
Fraudsters often use manipulative sales tactics—like pressuring you with "limited-time" offers or urgent payment requests—to push you into shopping impulsively. Be especially cautious if they request payment through unconventional methods like wire transfers, peer-to-peer payment apps, or gift cards, or ask you to pay upfront for vouchers before unlocking a supposed deal.
Use Secure and Trackable Payment Methods
Some payment methods offer more buyer protections than others. To increase the safety of your information and money, follow these best practices regarding the payment methods you use for online shopping:
- Use payment options that allow you to dispute fraudulent transactions and potentially get your money back, such as credit cards, debit cards, and PayPal.
- Avoid payment methods like wire transfers, gift cards, crypto, or peer-to-peer apps like Zelle, since any transfer using them is considered final, making it difficult or even impossible to reverse.
- Keep all transactions on one platform. If someone asks you to complete a purchase via email or off-site messaging, it’s likely a scam.
Even with secure habits, traditional payment methods don't solve all problems, especially card number theft and misuse. Every time you enter your payment card details on a website, you trust that the merchant’s security will protect them. If it doesn’t and the merchant suffers a breach, your payment details can be stolen.
This is where virtual cards can help as one of the best ways to pay online without getting scammed. They hide your real card info by allowing you to generate a unique card number for each purchase or merchant. So, even if an online store is compromised, your actual payment card details remain safe.
While some banks, like Citi and Capital One, offer virtual cards, a dedicated provider like Privacy provides more flexibility and control.
Shop Online Confidently With Privacy Virtual Cards
After connecting your bank account or debit card to Privacy, you can generate unique 16-digit virtual card numbers with CVVs and expiration dates and use them online wherever U.S. Visa® or Mastercard® cards are accepted.
Privacy lets you create three types of virtual cards:
You can pause or close a Privacy Card at any time to block unauthorized charges and stop merchants from billing you after free trials. Additionally, you can set spending limits to ensure any transaction over your set amount is automatically declined.
Privacy’s Data and Access Security Features
To help protect your funds and your account, Privacy employs bank-level security features, including:
- Two-factor authentication (2FA)—Add an extra layer of login protection beyond just a password.
- End-to-end encryption—All sensitive data is encrypted both in transit (via TLS and IPsec with AES-256) and at rest.
- Data storage best practices—Your data is stored across private, single-tenant servers in multiple geographic locations, with strict firewalls and no public internet access. Plus, Privacy never stores your bank account login details.
- Fraud protection—Privacy handles unauthorized transaction claims with care and diligence, and allows you to dispute charges seamlessly.
Additional Convenience Features of Privacy
Privacy makes managing your payments fast and effortless with these additional features:
- Browser extension—You can autofill your virtual card details at checkout using browser extensions available on Firefox, Edge, Chrome, Safari, and Safari for iOS, which allows for faster, smoother transactions.
- Mobile app—Manage your cards on the go with the Privacy App for Android or iOS. You can generate new cards, track activity, and receive instant alerts for every charge or declined transaction.
- 1Password Integration—Store, generate, and access your Privacy Cards directly within the 1Password browser extension, right alongside your login credentials.
- Card Notes—Add custom notes to each card, like merchant names, billing cycles, or renewal reminders, for better organization and clarity.
- Shared Cards—Share virtual cards with trusted friends or family members without exposing your real payment information, making it easy to manage group purchases securely.
Get Your First Privacy Card
Ready to take control of your online payment security? If you're a U.S. resident aged 18 or older with a checking account at a U.S. bank or credit union, you’re just a few steps away from getting your first Privacy Virtual Card.
Here’s how to get started:
- Sign up for your Privacy account
- Verify your identity by submitting the required KYC information
- Link a funding source, like your debit card or bank account
- Create your first virtual card and use it instantly at checkout
Privacy offers four flexible monthly plans, each designed to meet a different set of needs:
