Buying Safely in Online Auctions

While making purchases online is relatively safe, making credit card purchases through Internet payment systems -- Pay Pal, for example -- is not necessarily safe. This is something that many people have recently discovered. If you get hoaxed in an Internet auction and report it to your credit card company, the best credit cards will give you 100% of your money back and hand the bill to Pay Pal.

In order to avoid this, Pay Pal has struck merchant agreements with some credit card companies (like Discover Card and American Express) that treat Pay Pal as a middleman, who has done their job once the money has been moved. However, with a major credit card, Pay Pal is considered a ‘merchant of record’ and is expected to be responsible for purchases made using its services.

So while it’s not best for Pay Pal, it’s probably best for you to use a credit card when paying for an online auction. Still, there are some things to consider: for purchases through Pay Pal under $400, the company offers its own insurance. Also, if you do use the fraud protection service of your credit card company, Pay Pal is known to freeze accounts for not dealing with the dispute in-house and to go after the money that your credit card company recovers from them.