Jason Stipp: I am Jason Stipp for Morningstar.
Overspending this holiday season isn't the only risk that should be on the shoppers' minds. Identity theft is also another important consideration.
But luckily there are a few simple steps you can take to safeguard your identity. Morningstar's Christine Benz is joining me today to give us some more tips on that.
Thanks for joining me, Christine.
Christine Benz: Jason, nice to be here.
Stipp: So, there a couple of different ways that people might be shopping this holiday season, online and in the store. There are a few different things to keep in mind for both of those. Let's start with the online environment; it seems increasingly more and more folks are doing their shopping online. There are some distinct characteristics there where you can really protect yourself from an identity theft standpoint. What are those?
Benz: Well, the first step, Jason, is just to make sure that your home security software on your computer is as up-to-date as it can possibly be, and make sure that you've also got the latest version of your browser system that's available, because usually they'll have the latest in encryption technology. So that's a good starting point.
Then, when you are shopping online, and you get to that point in the transaction where they are asking you to enter your personal information, your address and credit card number, you want to see that URL switched from HTTP to HTTPS. You want to make sure that happens because that ensures that you are switching to an encrypted situation, which would be safer for online choppers.
Stipp: And another way, I know that you can keep a record of your shopping while you're online, sometimes they'll send you an e-mail, but it's also good to take further steps to make sure that that transaction has gone through and it's what you expected it to be?
Benz: That's right. So, I would say either print that out or plan to save it, keep it in file of other receipts, so in case you do need to return something or something doesn't arrive on time or whatever it might be, you have some record that you made that purchase, so that's a great next step.
Stipp: Or if the charge comes through and it's not what you expected, at least you have a record somewhere of what you thought you paid.
Stipp: In the online marketplace, one of the great things is that there is a variety of online stores where you can go, you can do bargain-hunting much more easily, but there's also a lot of vendors out there that you may never have heard of. So what should you do in the case that you're on a website and maybe you're not quite as familiar with it. Should you take more precautions there?
Benz: Well, I would, Jason. So if it is an unfamiliar name, I do a little bit of web searching to see if you can find other references to that retailer. It may be really on the up and up, and maybe the firm is really trying to gain some business by undercutting its competitors with low prices, but you want to make sure that it is a valid retailer before you give them your credit card information.
Stipp: So quick Google search, you can see what other folks have written about that vendor. Maybe get a better sense of what kind business it does.
Stipp: So on the in-store environment, I know a lot of stores are opening even earlier this year, so a lot of folks will be heading out, maybe even on Thanksgiving night to start their shopping. Are there some steps you can take there as well to safeguard your credit and your identity?
Benz: Right. So I would say travel light is my first bit of advice, so you want to strip your wallet of all but the essential things that you need to do transactions, so maybe your major credit card and your ID would be a good starting point.
And then make sure that you have copies or some sort of supplementary information about those basic documents at home before you even hit the road to start shopping. I think that's a good starting point.
And then when you're out and about, I would make sure that you conceal that credit card as much as you possibly can in shopping situations. Try to not let it leave your sight. That can be difficult in restaurants; often your server will take away your credit card while it gets processed.
You also want to be on the lookout for the handheld card processors. They are not all bad. That should not always set off alarm bells, but in some cases those types of processors have been linked to a type of identity theft called skimming. So you want to be careful and just make sure that the retailer is taking adequate precautions with your card at that point.
Stipp: So another thing I know with credit cards, Christine, is that some vendors, if for really small amounts, they won't require you to turn over the card, and they won't be checking the signature on your ID. So is there some way that I can kind of prevent problems if my card did fall into the wrong hands, keep them from going out and buying a new stereo system or something with it?
Benz: Well, Jason, yes. I think one neat safeguard that consumers can take is that they can write, "check ID" on the back of the card alongside the signature, and every time you turn over that card, that will require the salesperson to ask you for some form of picture ID to match to your actual credit card. I think that's a great safeguard.
Stipp: So, for those big purchases where they are going to be checking, then there is just one extra step that they would take that someone who stole your card or something wouldn't be able to live up to.
Stipp: So, on the point of the usage of the credit cards, I know that debit cards are also increasing in usage. There may be different protections with credit and debit cards, or at least the process might be different for your protections. Is there an advantage to using credit versus debit when you are out there shopping this holiday season?
Benz: Well, in terms of consumer protections, debit cards have actually gotten a lot better, but overall I would say that credit cards are a better way to go for most consumers, and the key reason is that if you have a fraudulent charge on your credit card, you can get it cleared up before you actually have to pay the bill. If something appears on your debit card the onus is on you to prove that it's not your charge that it's someone else's charge. So I just rather be in that position of not paying the bill versus having to prove that I didn't actually charge something.
Stipp: Certainly better to stop the payment rather than having to get the money back after it's already left your account.
Stipp: So, another nice thing that you would mention there, I know that some people will wait until they get their monthly statement, but with online now you don't necessarily have to wait until the end of the month to see all the purchases that you've made.
Benz: Right. So, I think one great thing to do during the holiday season is to hop on to your credit card site periodically throughout the month of December and see, okay, what kinds of transactions are rolling onto my card. That way you can take sort of a pre-emptive step in case there is some identity theft or fraud going on, and you can also get your arms around what you are spending as you go along, which is also a healthy practice.
Stipp: Well, certainly, it sounds like some very sound advice for this holiday season. Thanks so much for joining me, Christine.
Benz: Thank you, Jason.
Stipp: For Morningstar, I am Jason Stipp. Thanks for watching.