According to comScore, a London-based digital data tracking company, shoppers spent $24.6 billion online in the period between Nov. 1 and Dec. 31, 2006, a 26% increase over 2005.
And why shouldn't consumers be flocking to their keyboards? Internet shopping offers many benefits for gift givers who prefer to steer clear of the traditional holiday shopping experience.
If you're sold on the benefits of online shopping but still worry about the security risks of e-commerce, you'll be happy to know that some experts consider online shopping safer than in-store buying. Still, consumers have to do their part to protect themselves.
Shop with merchants you know. Experts say online shoppers are safest when patronizing the major Internet merchants (Amazon.com, for example), the online outposts of major retailers (such as Nordstrom.com and Target.com), and vendors that are personally recommended to them.
If the perfect gift is available only from a seller you don't recognize, you don't have to pass it up—there are many honest online sellers who don't have a big name—but you do have to be careful.
Look for clues about the site's legitimacy. Is there a phone number and physical address for the vendor? Does a live person answer the phone when you call, or do you at least get a prompt response if you leave a message? Does the site make it easy to find important information such as shipping costs, payment options, delivery methods, and return policies? Is there a privacy policy, and are you satisfied with what the seller will and will not do with your information? Missing images, broken links, and misspellings could be a sign of a quickly constructed bogus business.
If you have lingering doubts, you could look for another seller. Or, you can do some further investigating:
Always use a credit card online. OnGuardOnline.gov, a project of the Federal Trade Commission (FTC) and the technology industry, reminds shoppers that there's a $50 limit on your liability for unauthorized charges on your credit card. You also have the right to withhold payment while the card issuer investigates a dispute. A debit card, on the other hand, potentially puts your entire bank account at risk. If you're the victim of fraud and your bank balance disappears, your money could be lost, at least temporarily.
Some credit card companies now offer customers a special credit card number—often called a single use or substitute number—to be used when shopping online: Your real number is never exposed. Ask your credit card issuer if it offers this security feature.
Consumer advocate Chris Bjorklund, of San Francisco, says she has probably conducted hundreds of transactions online over the past five years and has never had a problem with undelivered or misrepresented items. Still, "I only use PayPal when buying from independent sellers," says Bjorklund.
PayPal is a service that serves as a sort of middleman, allowing consumers to make online purchases without ever exposing their credit cards or bank information to the seller. Not all sellers accept PayPal payments. The service is free for buyers.
Make sure the transaction is secure. One sign that a Web site is secure is a locked padlock icon in the browser window frame. This tells you your personal information will be encrypted when it travels through cyberspace. Another sign is the "https" or "shttp" that replaces "http" in the Web site address when you go to the checkout page.
Look for logos from organizations that certify Web sites as secure, such as Verisign, and those that identify a business as having trustworthy online privacy policies, such as TRUSTe and BBBOnline.
Don't ever provide your credit card information via e-mail or an instant messaging program. These messages are not encrypted, and they could sit on someone's server long enough for many pairs of eyes to see them.
Know exactly what you're getting. The only person who should be surprised by your purchase is the recipient of your gift. Before you place your order, know exactly what the bottom line price will be, including tax, shipping, and handling charges. These charges can eat up any savings you thought you'd be getting when you found an online bargain. How many days will it take to receive your order? How is it being shipped? Is there a guarantee it will arrive by the date needed? What if it doesn't? What is the return and refund policy? Who pays return shipping?
Save all receipts and email confirmations.
Use a secure delivery address. If you're away from home all day, you might ask a neighbor who stays at home or your employer if it's OK to have packages delivered to their temporary care. If you have merchants ship directly to your recipients, alert them to be watching for a package.
While gift cards may seem like the ideal solution for a stymied gift giver—they're easy to buy online or even at the local grocery store, require little or no wrapping, and allow recipients to have a say in their gift—they do have some flaws.
Evan Johnson, an administrator in the consumer protection office of Montgomery County, Md., says consumers should be aware that gift cards can carry fees and expiration dates. Johnson's office publishes an annual gift card report that analyzes costs and policies for many of the most popular retail, or merchant, and bank gift cards. (Recipients can only use retail cards for purchases from the issuing merchant. Bank cards carry the Visa, MasterCard, Discover, or American Express logo; your recipient can use them at any establishment that accepts those brands. Mall cards, which can be used at any establishment in the mall where they are purchased, are a type of bank card.)
According to the 2006 report, only a small handful of the retail cards included in the survey carry an expiration date or a maintenance/inactivity fee. On the other hand, all of the 10 bank cards surveyed impose a transaction charge, ranging from $2 to $9.95, upon purchase of the card. Nine of the 10 cards impose a monthly maintenance fee. And all 10 have an expiration date.
Bank card recipients also may lose part of the value of their gift card because of a processing flaw that makes it difficult to do a "split transaction"—that is, pay for a purchase greater than the card's value using a second form of payment to cover the difference.
"If I knew someone really wanted [the flexibility of] a bank card, I would get one where fees don't kick in for a while," says Johnson. (The gift card report includes information about when monthly maintenance fees begin on the cards included in the study.) Johnson says if he were buying a retail card, he would look for one without any fees or expiration date, that can be used at the company's Web site, and that is replaceable if lost or stolen.
Johnson recommends that consumers read all the small print on the gift card and the packaging before making a choice. Then, pass that information on to the recipient so that he or she uses the card before it loses value.
The Montgomery County consumer protection office will publish its 2007 gift card report by mid-November. You can access it, and past reports, at the office's Web site.
Another potential pitfall when it comes to gift cards is choosing the wrong one, which apparently is not uncommon. At any moment, there are thousands of cards offered for sale or trade on Internet sites such as eBay and craigslist because gift cards are nonrefundable.
Over the past few years, a handful of card exchange services have cropped up on the Internet as well. Services such as Plastic Jungle, CardAvenue.com, and SwapAGift.com allow visitors to buy, sell, or trade gift cards. The cost to use the services varies from site to site and may include a registration fee, a transaction fee, or a combination of both. Buyers pay less than the face value of the card; sellers forfeit a portion of the value of their card.
Before using a card exchange service, understand the fees and terms as well as what, if any, measures the service takes to protect against fraud--such as someone selling or exchanging an expired, invalid, or stolen card.
Bjorklund has identified a third gift card flaw. "I used to give my nieces and nephews checks for Christmas, and they'd never get around to cashing them," she says. "Now, even if they don't use the gift cards, the store gets the money."
A survey commissioned by Newgistics, an Austin, Texas-based returns-management consulting company, in December 2006 revealed that one of five adults (22%) returned items received as gifts during the previous holiday season. In a press release announcing the results of the survey, spokesperson Ken Johnson says gift givers can make it easier on themselves and recipients by buying from retailers offering a convenient return process.
For the most part, a merchant can establish any return policy it chooses, which means five merchants in the same mall could have five different policies. Before you make a purchase, ask the merchant if the item is returnable, how many days you have to return it, how your money will be refunded (cash back, a credit card refund, or store credit only), and if there is a restocking fee (a percentage of the purchase price deducted from your refund—more common with large electronics and computer retailers).
While there are advantages to shopping online and by catalog, returning items that have been shipped to you can be expensive and inconvenient. In an early-2007 survey conducted by PriceRunner, a comparison shopping engine, almost 40% of respondents said they were not satisfied with the return process for items purchased online. The prime reasons for their dissatisfaction: having to pay the shipping costs for returning the item and the time and trouble associated with making the return.
Typically, you'll pay shipping and handling charges to receive your order and shipping charges to return the item. Some merchants do cover all or a portion of the shipping charges on items being exchanged rather than returned for a refund.
Whether you're shopping at a store, online, or by phone, these tips will help ensure many happy returns:
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