Stay secure when buying goods online

High Street shops are in crisis, judging by this week's raft ofcasualties in the retail sector, and a major factor is the internet.

Online shopping is set to grow its market share from 8% to 12%over the next four years - that's another pound(s)40 billion beingspent at the click of a mouse.

Now the EU, hardly the most popular institution of the momentwith its request for a 5% budget increase, is at least proposing tostrengthen the UK legislation which protects consumers when shoppingonline.

Transacting all sorts of business via the web is becomingincreasingly common. Nearly 40 million people's accounts areregistered for online access compared to just 6.4 million in 2000,according to latest figures from the British Bankers' Association.However some consumers are still concerned about the security ofinternet banking.

For shopping, when most goods or services are bought via theinternet, consumers currently have seven days under EU law to changetheir mind for whatever reason and withdraw from the purchase. Ifthe proposed new rules go through, the cancellation period will beextended to 14 days.

The cooling-off period starts from the day after the goods arereceived. Under the present rules, this period is increased to amaximum of three months and seven days if a trader doesn't informcustomers in writing about their withdrawal rights and how to returntheir goods. If the new rules go ahead, the return period will beextended to one year in this situation.

If you do cancel your purchase, instead of having 30 days torefund your money, traders will have to make refunds within 14 daysin future. As now, though, there will be certain exceptions to therule including perishable items, items made to order, goods such asCDs where a security seal has been broken and, currently, itemspurchased through an online auction.

Under the EU's latest proposals, however, consumers will also beable to change their minds about auction items and receive refundsproviding they have been bought from a professional seller. Sellersin future will also have to provide a clear estimate of the maximumcost of returning goods to customers if they are not paying for thereturn themselves.

Another common problem with internet purchases is the extra costwhich is added for using credit cards or other means of payment.

In future, traders will not be able to charge more than itactually costs them to offer that means of payment. Total costsincluding extra fees will have to be made clear before an order isplaced. Pre-ticked boxes for the purchase of extra services such astravel insurance will not be permitted in future.

That adds to last week's crackdown by the Office of Fair Tradingon the disguising of surcharges for credit card purchases of airlineand rail tickets online, and its ban on surcharges for debit cards.

Internet banking raises stronger anxieties for many. They fearlosing all their money if someone manages to hack into theiraccount. Clearly if hackers can get into the computers of majorcompanies or the police, as has happened recently, then banks mustalso be vulnerable.

However, as Amanda Brown of First Direct bank points out: "Ifmoney is removed from your account by hackers or through otheronline crime, then we will repay the money."

However, according to the Financial Ombudsman Service, one of themost common problems when it comes to banking online is human errorrather than being security-related.

Martyn James, a Financial Ombudsman spokesman, says: "We aredefinitely getting more internet-related complaints. One that cropsup regularly is people mistyping an account number or sort codewhich results in the payment ending up in the wrong place.

"People complain because the name of the account they have givenmay have been correct, and they believe the bank should have cross-checked - but it is the numbers that the bank looks at."

Mr James says that although the Ombudsman expects the banks tomake an effort to help people in this situation, they cannot forcerecipients to hand back money paid to them by mistake.

He says: "Banks cannot be sure that there is not a dispute goingon between the two people." If there is a genuine error by a bank,however, such as a bank making the same payment twice, the Ombudsmancan intervene.

The increased speed of internet bank transfers is also a mixedblessing for consumers. In the past, a cheque could be stopped ifsomeone had a change of heart, but with same day bank transfers thisis not possible. Many banks now make online transfers a two-stageprocess to give people longer to think about whether they are sureabout the payment they are making.

Using a credit card to pay for online transactions can addgreater protection due to the joint liability of the credit cardcompany under Section 75 of the Consumer Credit Act 1975.

However, Mr James warns that this protection may only apply whenyou are buying direct from the supplier.

He says: "This link can be broken if you buy through, say aticket agency, or even through Paypal."