How Will Data Breaches Affect Holiday Shopping?

How Will Data Breaches Affect Holiday Shopping?

October 20, 2020         Written By Tracy Farnsworth

The Christmas countdown is on. With holiday shopping right around the corner, people are starting to plan budgets, create gift lists, and keep an eye out for major sales. Whether Black Friday sales are taking place online or at local retailers, all eyes turn towards how, when, and where holiday spending is going to happen.

At the same time, the data breaches that have taken place in the past weeks, months, and years have consumers concerned. Since the shoe retailer DSW had the first data breach with more than 1 million records exposed in 2005, data breaches seem to get bigger and more concerning. The 2017 breach Equifax faced was another major event that started making consumers wonder just how safe their information may be.

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An overwhelming percentage of consumers admit they would think about changing their shopping habits if one of their retail stores where they shopped was breached. Most admit they’d consider returning to cash payments at local stores. There are problems with that thought, too.

Is Cash The Safest Method of Payment?

Is cash the safest payment method? Not always. Carrying around a lot of cash can be risky. Cash is harder to trace if it’s stolen, so it can be far more tempting. You cannot prove the bill belonged to you.

If you drop a $20 bill going from a shelf to a register, that $20 is likely gone. If you drop a card, you have the ability to stop the card from being picked up by a stranger and used. The same isn’t true of cash. Anyone can pick it up and use it without fear of being caught.

Some retailers simply want to stop accepting cash because contactless payments are easy, and don’t require contact between workers and shoppers. It led to the Payment Choice Act of 2019. During the COVID-19 pandemic, a coin shortage occurred, so some retailers stopped accepting cash due to the inability to give change. Between the risk of a data breach and store policies on cash acceptance, what are shoppers supposed to do?

The other issue with cash is that there’s no way to use it when shopping online. You can’t just hand over the cash to the retailer. You could mail it, but there’s the risk of mail theft. Plus, the entire process would take weeks to get the cash to the company, get your change, and have the item shipped to you.

Internet Shopping is Both Popular and Convenient

Between 2014 and 2019, online shopping increased from just under $1.34 trillion to $3.54 trillion. Shopping online is a leading reason people spend time online. It’s also a leading way to buy goods. Brick and mortar stores are seeing declines in shoppers, and both breaches as well as the pandemic hastened the decline.

After Target’s 2014 breach, they reported that profits in the fourth quarter dropped by 46%. The company’s stock prices fell by 11%. Following the breach, Target closed some land-based stores. Cybercrime reports that 6 out of 10 small businesses shut down within six months of a breach.

As more breaches occur, shoppers may switch loyalty. Instead of shopping with a debit or credit card, they switch to cash. If a store doesn’t accept cash, there’s a problem. People have to find ways to shop safely in a store or online without using cash and without risking the loss of information in a data breach. What are your options?

Alternatives to Cash for Online Holiday Shopping

What can you use in place of cash for online holiday shopping that also works in stores? Have you considered a prepaid card? You transfer money from your bank to the card and have a set limit for spending. For example, if you load the prepaid card with $300, you can spend $300. If you try to spend more than that, the transaction will be declined. Some banks and credit card companies allow you to set the account so that overspending isn’t possible.

Here are some of the top prepaid cards on the market:

Control ™ Prepaid Mastercard®


The Control ™ Prepaid Mastercard® card is another prepaid credit card option. Use direct deposit to add funds to the card. One thing that sets it apart is that there’s no minimum balance. As a cardholder, you have access to the MetaBank mobile app and online banking options. ATM withdrawals are also free.

Netspend® All-Access ® Account by MetaBank®


The Netspend® All-Access ® Account by MetaBank® card is another prepaid credit card option. Use direct deposit to add funds to the card. One thing that sets it apart is that there’s no minimum balance. As a cardholder, you have access to the MetaBank mobile app and online banking options. ATM withdrawals are also free.

PayPal Prepaid Mastercard®


With the PayPal Prepaid Mastercard®, you never pay late fees or interest rates. You move money into your PayPal account from a checking account or through direct deposits. The card works anywhere MasterCard is accepted. Use the card to get cashback each month and enjoy customized offers.

Prepaid cards are funded before you shop. Therefore, they are not reported to the major credit bureaus. That’s the main way they differ from a credit card.

You might find credit cards are better for your needs if you’re hoping to build a credit history while doing your holiday shopping. You can also gain reward points and earn cashback using a credit card. If you’re searching for the best credit card, do your research.

Compare APRs, fees, and rewards programs. Some rewards credit cards offer bonus cash back awards on certain categories. If there’s a card that offers doubled, tripled or even higher rewards on groceries, items for gift baskets could help you get a lot of cashback. See if there is $0 liability fraud protection offered with your card. If it is, you’re protected against any fraudulent use of your debit or credit card. Use your card with confidence.

Tips for Safe Holiday Shopping Online

You have your list and budget planned. How do you shop online for holiday gifts while also lowering your risk of identity theft? Here are some of the tips to follow for safely shopping online.

  • Stick to trusted retailers. A large retailer that specializes in online shopping is more likely to have an IT team dedicated to site security. Look at the security measures they use. If you’re trying a new store, look for the lock symbol at the start of the web address to be sure they are using a secure server. If the connection isn’t secure, don’t shop there.
  • There are no guarantees, but choose larger retailers that do have strong security measures in place. The Uber breach was discovered in October 2016, a month after it happened, but they didn’t notify consumers until November 2017. Find out if the retailer stores your card or if it asks if you want to save your card. If it does save it, go in and manually delete it after your purchase is complete. If you have to keep a credit card stored online to create an account, stick to making the purchase as a guest.
  • When possible use a credit card over a debit card. Credit cards offer more protection than a debit card. If a debit card is used fraudulently, your bank may hold you responsible for the first $50. Check your statements regularly. You have a certain amount of time in which you can report fraudulent transactions. If you miss that deadline, you could be held financially accountable for all of them. A credit card with a $0 liability fraud protection plan is the best card to use for online shopping.
  • If your credit card company or bank/credit union offers fraud protection services, sign up for them. If someone tries to make a purchase, you could have that credit card issuer call you to verify it’s you making the purchase. Some offer text message alerts that have you approving a transaction before it’s approved others may scan the internet for your information and alert you via email if anything suspicious appears.
  • Don’t share more information than is necessary to complete the transaction. You will need to pay for your purchase, enter your mailing or delivery address, and add a contact number in case there are questions. If the retailer asks for your date of birth or Social Security number, stop the purchase. There’s rarely a good reason for a company to need that additional information. If they ask, clarify why. Having a Social Security number and birth date makes it easy for a scammer to do a lot of damage.
  • When you set up a store account, use a strong password. Make sure you haven’t used that password anywhere else. Each store account you open needs its own password  and it should contain at least eight characters and a mix of numbers, letters (uppercase and lowercase), and symbols. If the store makes you choose a six-digit password that’s only letters and numbers, consider shopping elsewhere.
  • Finally, go in at least once a month and read your bank or credit card statement. Look for purchases you didn’t make. If there are suspicious transactions, report them. Your card will be locked. You’ll get a new card number and a new credit card will be mailed to you.

 

So, how are data breaches going to affect the future of holiday shopping? While some consumers won’t change their habits, others will look at finding safer payment methods. No matter what changes do or do not happen, people are expected to spend plenty of money on gifts for family and friends. The total budget may change and some may turn to prepaid cards, but spending doesn’t stop.

The information contained within this article was accurate as of October 20, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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tracy

About Tracy Farnsworth

Tracy Farnsworth went straight from a business track in high school to a full-time job in mortgage banking in Burlington, Vermont. After having children, she built a freelance career in content writing and took online classes as time allowed. She completed Social Media Marketing and Digital Marketing certificate programs with Ireland's online Shaw Academy and completed several courses in SEO and analytics. In her free time, she's the “mom” to a very clingy rat terrier, and the pair walk at least a mile every day. She's also a novice baker who is trying to master the art of sourdough bread.