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How to Buy Online -- Without Getting Ripped Off

Buying online can be a great idea. What's more convenient than sitting at your computer in your pajamas, clicking the computer mouse and having the item show up on your doorstep a few days later?

Virtually all retailers that have brick-and-mortar stores also have online stores. If you haven't tried online shopping, give it a shot, at least for a small purchase. You're likely to become hooked on how easy it is.

How to Buy Online, 1-2-3

  1. Prefer commodities.
  2. Consider shipping cost versus sales tax.
  3. Use a credit card.

For those of you who are experts at shopping online, I'm sure you'll excuse me if I go over some basics for people who have never tried it.

Online shopping is similar to catalog shopping, in that you choose items you want, pay for them, and they're shipped to you. With online shopping, you usually identify items you want to order by clicking on a "buy" button and placing them in a virtual shopping cart. Then, as if you were in a real store, you proceed to a "checkout" screen. There, you provide payment and shipping information. And you're done. Often, you'll get an e-mail that confirms the transaction.

Of course, the top question asked by shoppers who haven't made a purchase on the Internet is, "Is online shopping safe?" To which, I'd have to respond, "Compared with what?"

If some computer hacker were to somehow intercept your credit card number in mid-transaction -- highly unlikely -- so what? When the thief makes an illegal purchase, you call your credit card company and cancel the card. The bank will issue you a new card and waive any fraudulent charges. You take just as great a risk every time you hand a restaurant waiter your credit card and he disappears with it to a backroom cash register. How hard would it be for the waiter to copy down the number and use it elsewhere?

QUICK TIP

When buying from an unfamiliar site, look for an "About Us" page, and do a quick Google search on the retailer's name, looking for other customers' experiences. Some comparison shopbots rate retailers. If the retailer has a privacy policy, all the better.

Most online transactions are encrypted, meaning they're secure. When checking out, look at the Web address in your browser. It's secure if it says https: instead of http:. You can also look for a padlock icon in your Web browser, which signifies a secure site.

If you're worried about not getting merchandise you paid for, you can stick with merchants you've heard of. And, as discussed later in this section, if you use a credit card, you probably have further consumer protections offered by your card company.

If you're worried about your name, address, and telephone number being misused, well, you might be shocked at how easy it is to get that information anyway. I'm not saying that's OK; just that online shopping doesn't add much to that risk.

Prefer Commodities

For the uninitiated, online shopping is best for products that are commodities, in the sense that they are identical no matter where you buy them. They're widely available and it makes no difference which copy of the article you buy.

Sure, you can buy shoes and custom-made furniture online, but you don't get to touch, try on, and thoroughly examine online products. That's a drawback for some purchases.

Early on in electronic commerce, books on Amazon.com were among the first products sold. They were ideal to purchase on the Internet because each copy of a new book is exactly the same. The same was true of music CDs.

In a narrower sense, the Internet can be good for the opposite -- finding uncommon things, such as antiques and oddball merchandise. That's because the marketplace is so much larger than you will find in any one region of the country.

But especially if you're just getting started with online shopping, opt for commodities.



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From The 1-2-3 Money Plan Copyright © 2009, FT Press. Used by permission of FT Press, and Pearson Education. All rights reserved.

To order this book go to Amazon.


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