Virtual credit cards are alternate credit card numbers that can be created for you created specifically with online purchases in mind. With virtual credit cards, you may be able to customize both expiration dates and credit limits. Because of the control virtual credit cards offer consumers over expiration dates and credit card limits, virtual credit cards are a powerful force in fighting identity theft and countering credit card fraud. Virtual credit cards first came out to protect consumers when making online purchases, however they now have other uses such as when making telephone purchases or purchases through the mail.

Be sure to ask your credit card issuer how their virtual credit cards (if they offer them) can be used. By using a virtual credit card instead of your real credit card, any would-be fraudsters will be limited to stealing at a maximum whatever your limit on your virtual credit card is, something which your credit card issuer should end up refunding anyway (Canada/USA) if you report it within a certain period of time which should be listed in your cardholder agreement.

Some credit card issuers have virtual credit cards which are limited to (or have the option of being) single use credit cards, something which severely limits credit card fraud. Even legitimate online retailers have been known to sell data that is made available to them when you make purchases with a credit card — virtual credit cards can protect from this as well. Despite the fact that you may not be liable for unauthorized charges, the hassle and potential damage (eg. to your credit score) which may arise make a virtual credit card well worth considering.

Another alternative to consider for increased safety would be prepaid credit cards. The disadvantage (some may see this as an advantage) with a prepaid credit card is that you’ll need to put money on the credit card to make any purchases.

Whenever given the option, it’s always best to pay via credit card through PayPal, it giving you 2 ways to try and get your money back in the event a fraudulent transaction occurs (credit card chargeback, PayPal  payment reversal).

Whatever you do, don’t ever pay with a bank wire transfer (or debit card for that matter) online unless you completely trust who you’re dealing with and understand the risks — wire transfers are irreversible and offer no fraud protection. I have quite a funny story about wire transfers.. I purchased 2 domains last year for $9000 each and instead of sending a $9000 wire transfer twice, my bank accidentally sent 3 wire transfers of $9000 each (paying for one of the domains twice). This obviously wasn’t my fault and my bank would have been on the hook for the money had they not been able to recover it but to make a long story short, my bank had to literally beg Escrow.com to send them the money back. If my bank had sent the money to someone less honest, it’s quite possible they would have just kept the money. Even a bank is at the mercy of the other party when it comes to wire transfers.

Related posts:

1. WARNING: Network Solutions Security Alert
2. PayPal Chargebacks
3. Click Fraud Report