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Practical Computer Advice
from Martin Kadansky
Volume 4 Issue 12December 2010
In This Issue
Does using your credit card online make you nervous?
Have you ever wondered if there might be a way to reduce the risk of using your credit card online? Here's my advice on this tricky subject.
Does using your credit card online make you nervous?

It was late July, and I was about to place an online order using my credit card. Even though I've done this sort of thing for years, this was my first order with that particular vendor. I knew that I had full consumer protection in case of any problems or fraud, but I still paused to think about it. Then I noticed that my card was about to expire. (I had already received the replacement card but hadn't activated it yet.) So, I went ahead and placed the order, knowing that my card number, if stolen, would become unusable in a couple of days.

That order turned out just fine, but now you're probably asking yourself, "Has anyone ever taken this idea of 'protecting my purchase using an about-to-expire card' and turned it into something I can use more often? And how is Martin able to transcribe my thoughts so accurately?" It turns out that a few credit card companies have turned this idea into a useful option.

Temporary credit card numbers
To help prevent fraud, some credit card companies give you the ability to create temporary credit card numbers that are linked to your current account. You create them by calling customer service or using the company's web site. They'll have an expiration date and CVV code (3-digit security code), and you can use them just like regular credit card numbers.

According to my research, back in 2000 American Express was the first company to offer this service under the name "Private Payments." I actually used this a couple of times back in 2003. However, the Amex Private Payments program was discontinued in 2004.

They're also known as:
  • Disposable credit cards,
  • One-time use credit cards,
  • Virtual credit cards,
  • Substitute credit card numbers, or
  • Controlled payment numbers.
Exactly how they work varies from company to company. Here are some common features:
  • You choose the maximum spending amount.
  • You choose the expiration date.
  • You can only use the temporary number for one transaction or with one merchant.
  • You can cancel the number prior to its expiration date.
  • You can view your purchase history on the company's web site.
  • While your purchases will always be listed on your monthly statement, your temporary credit card account numbers may also be shown.
  • You'll probably pay no additional fees to use these features.
Since these features limit the use of a temporary number, if it gets stolen the thief will probably be unable to charge much, if anything, using it.

Which companies offer this?
My unscientific research (google) found the following companies that offer temporary credit card numbers to consumers, along with the phrase they use for this concept:
  • Bank of America (formerly MBNA): "ShopSafe"
  • Discover: "Secure Online Account Numbers"
  • CitiBank: "Virtual Account Numbers"
However, many companies (including American Express) don't currently offer this option. When I called Chase and explained what I was looking for, the nice lady in customer service told me that they don't have this feature, but "since you have zero liability for fraud, just call us if you notice any suspicious charges on your bill."

When would I use a temporary credit card number instead of my real card number?
  • Temporary credit card numbers are more secure, since you're not giving out your real credit card number, and they usually expire sooner and have lower spending limits, so using them helps reduce fraud and identity theft.
  • You can implicitly prevent auto-renewal charges from a given merchant. However, if you agreed to pay "missed-payment" fees when you signed up with that merchant (which can occur when a charge is processed after your card number expires), then you should explicitly cancel instead.
  • In a similar way, you can protect yourself from certain merchants that require a credit card number to start a "free trial," and then start charging you if you forget to cancel after the free trial ends.
  • Temporary credit card numbers are more complicated, taking more work to set up and keep track of.
  • They're not appropriate for certain situations, e.g., when buying airline or movie tickets, where you place an order online or by phone and then have to show your card to pick up the item in person. The number on your card won't match the temporary number you used in the purchase!
  • Make sure you know how your credit card company handles returns or credits after the number has expired. Some companies do this well, but with others it can be a hassle.
And, even when you use temporary credit card numbers, you still need to be a careful shopper, and to examine your credit card statement each month for any fraudulent charges.

What about pre-paid credit cards or gift cards?
You can also protect your regular credit card accounts by using separate prepaid credit cards or Visa/MasterCard gift cards, but many of these deduct various fees from your balance, while regular credit card companies that offer temporary credit card numbers generally don't charge any additional fees for using them.

What about PayPal?
PayPal (http://www.paypal.com) is a useful online service that lets you pay merchants electronically using your credit card or bank account without revealing your account number to the merchant. However, despite its growing popularity, relatively few online merchants accept PayPal, whereas practically every online merchant accepts credit cards. So, unless the merchant accepts PayPal (e.g., eBay, Best Buy, Dell, iTunes, etc.), I feel that temporary credit card numbers are more useful in preventing fraud.

Where to go from here
  • If you like the idea, call your credit card company (or check their web site) and find out if they can issue temporary credit card numbers on your account. If they can, make sure you understand how it works. If they can't, suggest that they look into it. If enough customers ask, they may decide to start such a program.
  • Search for "temporary credit card number" or "disposable credit card" to find out more.
  • Be a vigilant, skeptical consumer, whether you use temporary credit card numbers or not.
If you're confused or frustrated by something on your computer, I like to say, "You can do it!" You might just need a little encouragement, or information, or change of perspective, and that's where I come in.
How to contact me:
email: martin@kadansky.com
phone: (617) 484-6657
web: http://www.kadansky.com

On a regular basis I write about real issues faced by typical computer users. To subscribe to this newsletter, please send an email to martin@kadansky.com and I'll add you to the list, or visit http://www.kadansky.com/newsletter

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Copyright (C) 2010 Kadansky Consulting, Inc. All rights reserved.

I love helping people learn how to use their computers better! Like a "computer driving instructor," I work 1-on-1 with small business owners and individuals to help them find a more productive and successful relationship with their computers and other high-tech gadgets.

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