We frequently tell consumers to use a credit card when shopping online and to couple that with a third-party payment service such as PayPal, if possible. But today I learned about a new way to pay. It’s called a single-use, virtual or disposable card.
According to this article from Bankrate.com, these temporary account numbers might help thwart identity thieves. An online purchase made with a virtual card number shows up on a customer’s card bill just like any other purchase. But the number expires within one or two months. So if someone does get a hold of it, it may no longer work.
The article points out that virtual credit card numbers aren’t appropriate for some purchases. You usually need to show an actual plastic card to confirm a hotel, airline or car reservation or pick up theater tickets, for example.
The article doesn't mention this additional downside: While virtual cards may help protect consumers from becoming fraud victims, they also can be misused by cons seeking to cover their tracks.
Under federal law, debit cards do not have the same level of protection as credit cards. But many debit card issuers now offer extended liability protection to make up for the legal differences. As a general precaution, you should never pay by wire transfer or money order online. Only scammers will pressure you to pay that way.