A woman sitting at a desk working on a computer. There is a large white monitor in front of her and a small white keyboard and a white mouse in her right hand. She has a notebook open on her left-hand side. She is wearing a white button up blouse and has brown hair.

A woman sitting at a desk working on her computer.

Online shopping scams are one of the most prevalent forms of consumer fraud, especially social media scams. While online shopping scams are the most reported, scams using social media to promote investment opportunities are also prevalent.

The Federal Trade Commission reports in 2021 the estimated losses from online shopping scam, specially from social media platforms was $2.7 billion?

Why does this matter to you? If you do any online shopping whether you’re the seller or the consumer, you need to ensure your payment methods are safe and secure.

How to Pay When Using Online Marketplaces

Best practices in this case mean using the website’s recommended payment options. On sites such as Etsy, Amazon, Poshmark, and eBay there’s generally predetermined payment methods. If you choose to go outside the platforms, most sites put the warning they cannot assist you if fraud occurs.

If you have the option, fund your purchases with a credit card. You have more legal protections using a credit card than you do other payment options, such as debit, cryptocurrency or prepaid card.

Ensure you know what customer protections the websites you visit or buy from allow. You can find these in the site’s Terms and Conditions, or user agreements. Amazon’s A-to-Z Guarantee, for example, protects you for products you purchase from third-party seller delivery damage.

Paying in Person

If you’re meeting someone in person after making a Facebook Marketplace or Craigslist purchase, for example, consider using a point-of-sale system, like Square, if you’re accepting credit cards. You also have the option to use cash, but again, there are no consumer protections if you are unhappy with the item.

Make any goods exchange in a safe location, in daylight in a well trafficked public place, such as a coffee shop, bank, shopping center, or even a police station parking lot. Some communities offer a public space to conduct “safe deal zones” where buyers and sellers can meet to exchange goods and money.

How Consumers, Sellers & Small Businesses Can Protect Themselves

For business owners, it’s especially this time of year they need to protect their customers from fraud and ensure the safety of their own monetary transactions.

There’s a lot of fake businesses on social media, so ensuring your customers and clients trust you with their data, and their money is part of protecting yourself, your brand, your reputation, and your profits.

Some things to consider and protect yourself as a consumer:

  1. Credit cards: As previously stated, they are the most secure and safe payment method when you shop online. Most issuers offer zero fraud liability to ensure you’re not on the hook for any fraudulent transactions.
  2. ACH payments: These types of payments are often a good option for both the consumer and the seller, they transfer funds directly from one checking account to another bank account. This payment method has numerous security features, such as encryption and access controls.
  3. Credit cards with EMV Chip technology and Point of Sale terminals that can read them. With EMV technology there is a chip rather than a magnetic stripe, and each card has a unique encrypted information transmitted via the chip on your card.

Some things to consider and protect yourself as a seller or small business:

  1. Third Party Payment Processing: Many small businesses do not want to handle the responsibility of processing payments internally and can choose to have a third-party process the transactions. Ensure whatever platform you use complies with Payment Card Industry Data Security Standards (PCI DSS).
  2. Ensure your website platform is secure:
    • Keep your software and plugs ins up-to-date.
    • Require customers to use strong passwords.
    • Use a firewall to protect the site from unauthorized access.
    • Implement Transport Layer Security (TLS) to encrypt any data that is transmitted between your site and visitors.
    • Monitor for suspicious fraudulent activity using monitoring tools to detect and respond to any suspicious activity on your website.
  1. Train your employees: Perform regular security training and help employees understand the risks. You can also perform regular security audits of the business and ensure you have policies and procedures in place when fraud does occur.
  2. Use two-factor or multi-factor authentication for any website transactions or account creation. This can help protect user data and your site from having bot accounts created.

These measures are by no means the extent of how businesses are required to handle sensitive customer data, but taking extra precautions can help protect your business reputation and reviews.

Final Thoughts

Especially during the holiday season when fraud and online holiday scams are numerous, it’s important you do everything possible to protect yourself, your business and your customers.

Providing a safe, secure website, and ensuring payment options that are industry compliant and trustworthy is part of customer care.

For consumers, knowing that you run a business with integrity, take their safety and security seriously, along with offering whatever cool products or services you provide can build a lasting customer/client relationship.

If you need help with locking down your life and business, be sure and book a strategy session with us.

The guidance included in this article does not constitute legal advice and is for educational purposes only.