How Safe is it to Shop Online?

I am aware that there is quite a lot of mistrust amongst South Africans to shop online. I can understand this misconception as buying online is a relatively new concept and there is so much fraud elsewhere in the country that we South Africans are forced to be sceptical when it comes to transactions of any kind. Since I have returned to the country however I have noticed the increase of myths developing around this topic and thought you might appreciate some light on the matter.

I will be looking at the following four myths

• Myth 1: It is Safer to use your Credit Card in a Physical Transaction than Online
• Myth 2: Online Credit Card Transactions are not Secure
• Myth 3: The Buyer Bears all the Risk
• Myth 4: Not Many South Africans are Shopping Online

Credit Card Fraud is Rife in South Africa

The Credit Card industry has grown substantially over the past 20 years and unfortunately this has made it an easy target for crime. It currently exceeds R 50-million per annum in South Africa. According to Chris Trotskie, chairman of the SA Card Fraud Forum, the four major banks in South Africa loose approximately R 5 million per month due to credit card fraud. (Source: www.fraudinvestigator.co.za )

BUT:

Most of this Credit Card Fraud is not Committed Online

The most common type of credit card fraud in the country is the misuse of lost or stolen cards. Counterfeiting credit cards are not far behind, and it is obviously the seller that falls victim here. The next most common types of credit card fraud are account take-overs and credit card skimming. (Source: www.fraudinvestigator.co.za )

Furthermore, “50 percent of all debit and credit card-related fraud was mostly committed in supermarkets, service stations, fast food outlets, family clothing stores and restaurants.” (Source: www.iol.za April 05 2007; Guard your credit card during Easter )

Account Take-overs
Account take-overs are when a fraudster gets hold of your personal information. They do not even need your credit card. Consider these two scenarios.

In the first scenario, they phone your Credit Card Company or Financial Institution and change your address information. They will then report your current card lost and request that a new card be issued. The card will then be sent to the new address or they will receive information on where to collect the new credit card. They then make use of false identification to collect the card. Your statements will be sent to the new address and you will be unaware of the fraud that is occurring on your credit card. Your credit card account has now been taken over by a criminal.

The second scenario is from personal experience. We went to buy modems for our computer and at the Vodashop (please bear in mind that the same policy exists at most shops and so we are not targeting Vodacom in particular) the sales consultant asked to make a copy of our ID, and both sides of the credit card that was being used to pay with. This completely took us back but what was even more shocking was how surprised the sales consultant was when we refused, indicating that most customers just hand over all their information without thinking twice. With the information that she copied, which would probably be put into a back office where it is easily accessible, a potential fraudster would have a name, date of birth, ID number, credit card number and the three digit security number at the back of the card to order anything online or over the phone.

Credit Card Skimming
Credit Card Skimming is a method by which encoded information from the magnetic stripe of a credit card is gathered by an electronic credit card reader (skimmer). This information is used legitimately when processing a transaction. In the hands of a criminal the electronic credit card reader becomes a handy tool to gather information to use later in illegal transactions and purchases. Usually a criminal connects this "skimmer" to the credit card machine or a portable "skimmer" could be used to swipe your card when you are not looking. If you make a purchase, your information will automatically be stored in the "skimmer". At a later stage the criminal will use this information to make unauthorised purchases or encode this information on the magnetic stripe of a counterfeit card.

Credit card skimming often occurs in businesses where credit cards are used regularly, such as restaurants and other entertainment venues. In restaurants you will normally lose sight of your card when the waiter takes it to pay your bill. Some skimmers are as small as your hand, which makes it extremely easy for waiters to keep in their pouches.

THE POINT:
You are at a higher risk of crime using your credit card in a restaurant than buying shoes  online. Of course, statistics could change in the future when more users go online but I hope that this at least puts shopping online into perspective.

Myth 2: Online Credit Card Transactions are not Secure

Using your credit card online is safe if you use reputable websites and understand how a site is protected. Here in South Africa, an online seller needs to put their website through stringent testing with Standard Bank before they are allowed to take credit card transactions. Standard Bank use a payment gateway to test this site, and our site has been tested with PayGate. This testing is an expensive cost to the company in terms of the time it takes to be set up as well as the ongoing costs of keeping it secure. The point is that reputable businesses would have a proper business account set up, with operators which is what we have done.

Furthermore, all payment transactions on this website are done via Paygate and no card details are actually ever stored on Faithful to Nature – and this is for your added protection. It does not end here – Paygate has a Secure Socket Layer, version 3 (which is the strongest current security on the net.) This Secure Socket Layer (SSL) is a security protocol methodology designed to create a secure connection to the server for the transmission of confidential data through the Internet. SSL uses public key encryption, one of the industry's strongest encryption methods, to protect data as it travels over the Internet.

Myth 3: The Buyer Bears all the Risk

Wrong! By South Africa law, the seller bears all risk of fraud – not the buyer. This means that if you loose any money on our site due to fraud, we will have to take responsibility, and it will ultimately be our loss. Even if we had no altruistic motives surely this reason alone would be enough incentive to make transactions on this website secure.

Myth 4: Not Many South Africans are shopping Online

If you still do not feel confident using your credit card on the site, please do take advantage of the online transfer that we offer. Finally if you have any further questions, please don’t hesitate to contact us .

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