Why I Don't Use Credit Cards on the Internet
Posted by Max Dunn Thu, 22 Jun 2006 01:00:00 GMT
Several years ago, I stopped using credit cards on the Internet. Don’t get me wrong, I still buy plenty of stuff over the Internet including almost all of my books, clothes, amusement park tickets, and more. However, I never give out my real credit card number. Instead, I give out a virtual credit card number that can be used only once. I didn’t do this because I was scared that some hacker was going to get my card number and misuse it; I did it because some of the merchants I bought stuff from misused it. Here are the tales.
About 10 years ago, my wife bought a vacuum cleaner from a guy in Florida. This was not the run-of-the-mill vacuum but one that you normally could only buy from a door-to-door salesman. And it was the best—but it was also very expensive. So my wife shopped around and found one substantially cheaper, even with shipping. So she gave her credit card to him over the phone and got the vacuum a week later, and was very happy with it. However, a year or so later, a strange charge appeared on her credit card bill. It wasn’t much, something like $12.95 but still she didn’t know what it was for and she is pretty careful about keeping records. So she called the company and said “I don’t remember buying anything from you, but maybe I just forgot. Could you tell me what was purchased?” They said it was for business cards but she certainly had not bought any business cards. So she asked for the name on the card and at first, they didn’t want to tell her, but eventually gave her the name. And guess who it was? That’s right, the guy in Florida that sold her the vacuum. It seems as if he would keep the credit card numbers of his customers and occasionally make a small purchase that he assumed they wouldn’t notice. So she called the credit card company and reversed the charge, but this left us wondering how many other merchants that we had bought things from might also have employees that did the same thing?
The next incidence was last year when I signed up for MLB baseball online. It was pretty cool—you could watch almost any baseball game live over the Internet. The resolution wasn’t great, but when you sat back from the TV it looked pretty good. So I signed up for the $14.95 per month plan and watched a few games. However, since I am not really a baseball fan, I soon got bored. Assuming that the $14.95 per month meant that it was only for one month, I didn’t bother to cancel. However, when I got my credit card bill the second month, I saw that they had charged my card again. Going back and looking at the fine print, I saw that on this plan they would keep charging you every month until you canceled. And there was no easy way to cancel online or through email, you had to call during business hours. So finally I was able to call and canceled my subscription. Guess what, that’s right, on the next bill the $14.95 charge appeared again. So I called the credit card company and they reversed the charges. But next month another charge appeared! Well, to make a long, aggravating story short, at the end of the season they stopped charging me, and I was able to get back all but 3 months worth of charges. So I discovered that even a merchant that was not doing anything illegal could still continue to charge your card for a subscription that appeared to be a one-time purchase.
After this, I started using the Citibank virtual accounts. Each time I make a purchase, I generate a new number that can be used only once. If anyone tries to use this number again for another charge it will fail. This puts me in control. I can also generate a number that can be used for multiple purchases from one merchant and there can be a dollar amount limit or a time limit. This is useful for sites that I might make multiple purchases from and don’t want to hassle with generating a new number each time. I did give Amazon my real credit card number—I have never had any problems with them, or any of their affiliate merchants, and I don’t expect to. I also had to give my real number to the mega-host 1and1 because they do something screwy: they check your credit card number by making a small charge and reversing it from one merchant account, but then use another merchant to debit the actual charge. This messes up the virtual number which can only be used from one merchant, so I had to give them my real credit card number
So I would strongly suggest that everyone use some sort of virtual credit card number whenever making purchases on the Internet or over the phone.