The holiday shopping season is underway, with plenty of bargains, solid sales numbers and enough festivities to make it seem almost like a normal year. Just don’t let online phishing scams, overspending and other perils ruin it.
This is a time when many consumers can really dig themselves into a financial hole if they’re not careful. Here are some seasonal risks to beware of, along with suggestions for keeping your personal information, and money, safe.
SAVE: COVID-19 pandemic will change retail patterns but won’t extinguish holiday sales
Heed e-commerce security tips
Online shopping will grow at double-digit rates this holiday season, according to estimates by the National Retail Federation and others. While convenience and good deals are among the lures, consumers need to be cautious.
Shameka Walker, an attorney at the Federal Trade Commission, recently provided some updated tips for safe remote shopping. These include having late-version antivirus software installed on your computer, taking time to make sure the online merchants or sellers you deal with are legitimate, keeping records of online purchases until you receive the goods and sticking with secure checkout sites. Those are website addresses that start with “HTTPS,” where the “S” stands for secure.
She and others also recommend paying with credit cards, which provide added protection compared with debit cards, checks, cash and other forms of payment.
With credit cards, you may dispute charges under certain circumstances and temporarily withhold payments while the dispute is investigated. If someone else uses your card without permission, your liability generally is limited to $50, she said. Many credit card companies improve on this and won’t hold consumers responsible for any unauthorized charges — in addition to providing extended product warranties, reward points and other benefits.
Monitor accounts regularly
The holiday shopping season can be a good time to adopt best practices regarding credit cards and other forms of payments, if only because you’re doing more spending, possibly at unfamiliar retailers.
Such tips include regularly monitoring your accounts for accurate transactions and setting up text alerts so that you’re notified of unusual activity.
“Anytime (a transaction) is over $25, I’m going to get an alert,” said Cyndie Martini, president and CEO of Member Access Processing, a company that, among other services, coaches credit unions and their members on credit and debit card use.
Credit cards (Photo: Getty Images)
While a $25 threshold might seem low to many people, triggering an excessive number of alerts, fraudsters often make a lot of modest-dollar transactions in hopes consumers won’t notice, Martini said. At any rate, you can raise the notification limit if you prefer.
Martini also recommends tracking transactions as often as once a day. If that seems excessive, you might opt for a service such as Mint.org, which allows users to consolidate their financial accounts in one place for easier monitoring and budgeting.
Above all, Martini emphasizes the need to know whom you’re dealing with when buying online. Be careful about clicking on links that take you to websites that might not be legitimate, with letters or words slightly different from those of the actual site.
Beware of excessive borrowing
No discussion of holiday finances would be complete without a look at credit cards and consumer debts. So far, there hasn’t been a lot of bad news to report, which is remarkable given how many people have lost jobs or otherwise suffered financial setbacks.
Consumers have been paying down their credit card balances big time this year. Credit card debt as a percentage of disposable income fell to 4.5% at midyear, down 0.9% from the first quarter, reported the American Bankers Association, which speculated that many Americans applied stimulus payments and other federal aid to reduce debts.
But Jim Triggs, CEO of Money Management International, a nonprofit financial-assistance organization, cautions that consumer debt woes could be more serious than those figures suggest. The reason? Many people are having their rent or mortgage payments deferred, which has allowed them to pay down other debts. When those programs expire, more consumers could feel the pinch. That’s why he advises caution when it comes to holiday spending.
Among his tips: heed budgets, focus on quality gifts over quantity, prioritize the use of lower-interest credit cards (if you have more than one) and take advantage of 0% retailer financing if you’re confident you can pay off the bill when the promotional offer expires. If you shop online, have gifts sent directly to recipients if it saves you shipping costs, and set expectations with family members and friends if you’re cash strapped.
“I think we’ll see a lot of consumers struggling well into next year,” Triggs said.
Understand gift-card basics
If you’re stumped for gift-giving ideas, you usually can’t go wrong with gift cards. But there are a few key pointers to keep in mind about them.
Federal law mandates that cards can’t expire for at least five years from the date of activation, and the law places limits on fees. An issuer can’t charge an inactivity fee unless the card clearly states a policy for allowing such fees and at least a year has elapsed.
Among various tips, the Federal Trade Commission recommends buying cards only from known, trusted sources. Cards sometimes become available through online auctions, but these might be counterfeits or could have been obtained fraudulently.
The FTC also suggests reading the fine print, especially as it pertains to fees, and inspecting a gift card before purchase, making sure that protective stickers haven’t been removed and that no areas have been scratched off to reveal PINs, or personal identification numbers.
And while it might seem gauche, the FTC suggests giving the gift-card purchase receipt to the recipient in case the card gets lost or stolen.
Beware tax fraud, too
Fraud risk this time of year isn’t confined to holiday shopping. For example, the Internal Revenue Service this month has been warning of a new texting scam tied to stimulus payments designed to trick people into disclosing their bank account information.
The scam features a text message that states: “You have received a direct deposit of $1,200 from COVID-19 TREAS FUND. Further action is required to accept this payment into your account. Continue here to accept this payment.” The text includes a link to an official-looking but fake internet address.
The IRS is asking people who receive this message to take a screenshot and send it, along with other relevant information such as the time/date of the message and sender phone number, to [email protected]
As a reminder, the IRS doesn’t send unsolicited text or email messages or place phone calls threatening lawsuits or imprisonment. Nor does the agency demand that people make tax payments using gift cards.
Business reporter Russ Wiles writes a weekly column on personal finance. Reach him at [email protected]
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