I get asked that question a lot. I usually start out by explaining that I have done online purchasing since the web started getting busy in the mid 90's and online versions of stores started appearing. My earliest purchase were mostly computer parts - I simply couldn't find what I needed locally.
Like many people, I was cautious. After all, what prevented my credit card information from being hijacked?? In 1995, Netscape (an alternate browser of the time) released the first version of what it would call Secure Sockets Layer, or SSL for short. It had began development in 1993 in response to concerns from both consumers and credit card companies. Today, a newer version of security is called Transport Layer Security. Information about these technologies can be found in an article in Wikipedia. These are now used in all browsers.
SSL/TLS is the protection used for transporting personal data, including credit card information between your computer and the store's website as it is sent across the Internet. If anyone walked you through some of the precautions of using the Internet, they should have mentioned watching for the padlock that appears in the browser when conducting a transaction. Another thing to look for is in the address bar. When the link is secured, the letters https:// will appear at the beginning of the address instead of just http://. The additonal "s" at the end indicates a secure connection.
So, we've got the secure link, so we are all set, right? Well, in short -- NO.
Aside from guaranteeing that we have a secure link, there are several other things we need to look at to make sure we're being smart about sharing our private information.
First - make sure that the store we are about to do business with is a trusted company. The Better Business Bureau has an online presence to investigate whether a business can be trusted or not. If the website is not from someone you recognize, you should probably take a moment to check them out to see if anyone has reported problems. Sometimes, this can be hard to do, especially with online auctions - but taking the time to read information left by customers can be helpful.
Second - make sure that you keep up with your antivirus and scan for malware (see my first post) so that your computer itself doesn't give up personal information to some unscrupulous character through a virus or trojan. Many trojans use programs to copy keyboard entries, including credit card numbers.
Practice safe computing, and always watch for any signs that your privacy has been hacked - online or otherwise. Identity theft has been on the increase for many years, and we as consumers need to take steps to protect ourselves. The Federal Trade Commission provides a website to educate consumers about online fraud and protecting personal information. Take the time to check it out.