Online Shopping, The Beginners Guide - Demystifying personal finance by Matthew Richards

The worldwide web is a great place for bargain-hunting, with most goods available at lower prices than in a bricks-and-mortar store.

But convenience appears to be an even bigger attraction, according to a survey by Apacs, the trade body for payments agencies such as banks. It revealed that 85 per cent of shoppers find the crowded high street too stressful

Internet shoppers may be too relaxed for their own good, however. Like the native tourists who stroll down Oxford Street unaware of pickpockets eyeing their pockets and handbags, many people using credit cards online do not realise the risks they are taking.

By being aware of the danger and taking some basic precautions, you can reduce your chances of falling prey to cyberspace criminals.

• So how serious is online fraud?
• Why is the problem getting worse?
• What should I do to protect myself?
• How can I stop other people using my credit card details to make purchases?
• Are there other ways to reduce the risk of using a credit card online?
• How do I know if a website is safe?
• How can I avoid going to these sites in the first place?
• Are there any other e-mail hazards I should look out for?
• What about making my computer secure?
• That sounds a bit technical. Are there any web pages with useful advice?

So how serious is online fraud?

It costs consumers millions of pound a year. APACS reckons card-not-present (CNP) fraud online, by phone and by mail order amounted to £95.3m in the first half of 2006, compared with £70.2m in the first half of 2004.

Why is the problem getting worse?

Traditional forms of theft are becoming less appealing to criminals. For example, improved security technology has made cars more difficult to steel, and the falling prices of electrical goods such as CD players has made burglary less worthwhile. So thieves are turning to more sophisticated enterprises such as credit card fraud.

Another factor is that more and more consumers are buying goods over the internet, so there are more opportunities for wrongdoing. But to keep things perspective, bear in mind that the value of online transactions is increasing at a faster rate than the amount stolen through CNP fraud - which suggests that internet retailers and shoppers are managing to keep an increasing proportion of their transactions out of the fraudsters' hands.

What should I do to protect myself?

Use a credit card rather than debit card for online payments, as this offers greater protection. Whatever card you use, memorise the pin - do not write it down anywhere.

How can I stop other people using my credit card details to make purchases?

MasterCard and Visa both offer an online password to ensure that, even if someone else discovers your credit card's number and expiry date, they cannot use it. Go to www.mastercard.co.uk/securecode or www.visaeurope.com/verified to find out if your card is eligible.

Are there other ways to reduce the risk of using a credit card online?

You can set up a credit card that you only use for shopping online, with a low spending limit. Check your monthly statement carefully - fraudulent purchases tend to stand out, and payments to Californian tattoo parlours or Vietnamese motorcycle dealers are a sure sign of trouble (for most cardholders).

How do I know if a website is safe?

When you go to a sensitive area, such as the checkout page where you enter your card details, look out for the site address changing from http:// to https:// - the "s" signals that it is a secure page. This may also be indicated by a padlock at the bottom of the screen.

If you have suspicions about a website, consider calling the telephone number on its "Contact Us" section to verify its credentials. You can also check that a website is registered to the company it should be visiting www.nominet.org.uk/whois or www.networksolutions.com/whois

Conmen go to great lengths to set up fake websites that appear to be those of retailers or banks, to dupe customers to hand over credit card details or other sensitive information.

How can I avoid going to these sites in the first place?

There are two routes to these fake sites: links and typos. To avoid the first route, always type in the web address yourself rather then following a link, which could be to a fake site.

The main source for these links is e-mails that purport to come from a real company. To avoid the second route - type in the address carefully, as fake sites, known as "typo squatters", may be set up to catch web users who have made a spelling mistake.

Are there any other e-mail hazards I should look out for?

Anything with a heading along the lines of "Re: Your Order" should arouse your suspicions. A genuine retailer will often send confirmation of an order by e-mail, but will not ask you to send credit card information.

What about making my computer secure?

Install up-to-date anti-virus software and a firewall. The former describes computer programmes that identify, thwart and eliminate viruses - malicious software that damages your computer. The latter is a barrier to keep sensitive data on your computer separate from the internet.

That sounds a bit technical. Are there any web pages with useful advice?

A government-backed scheme had produced www.getsafeonline.org - a valuable source of information that is regularly updated. For information on CNP fraud, go to www.cardwatch.org.uk