ith each click of the mouse, consumers are getting more comfortable conducting business on the Internet. The 25 million households that went holiday gift shopping online in 1999 are expected to swell by more than 40% to 35.5 million in 2000.

As online shoppers adjust their expectations to past experiences, merchants work to avoid past problems of balky downloads and poky deliveries.

But one possibility neither party may be prepared for is business failure. Internet analysts warn that many e- retailers are operating on borrowed time—and should adversity befall those sellers, some of their customers are bound to get hurt.

Like a turn in the weather, the demise of an online merchant is difficult to forecast. Still, there are signs to watch for and precautions to take so you can protect yourself from what you can't predict.

Here are some questions and answers to help keep you warm and your money dry as you venture out into the wide world of Web shopping.

Why should I be any more wary of online retailers than conventional stores?
Web-based shops lack the physical surety of permanence and accountability associated with their brick-and-mortar brethren. In cyberspace, it's relatively easy for someone to set up a site that masquerades as a legitimate online outlet. You could lose money—as well as your privacy—by dealing with fly-by-night sites.

Of course, even merchants on the up-and-up are capable of slipping now and then, or even going out of business—the same as conventional retailers. The difference is that when an Internet business lets you down, there's not always a building where you can go to demand satisfaction.

Also, the rapid proliferation of shopping outlets on the Web suggests that many are due to go under, possibly marooning their customers. Forrester Research Inc., an Internet research firm based in Cambridge, Mass., predicted in April that most of the current retailers would be out of business by 2001 because of thin finances, escalating competition, and investor disenchantment.

How do I know I can count on the online seller I'm dealing with?
There's no sure-fire way of telling whether any business—online or off—is about to go belly-up. But by establishing the reputation and accountability of a company, you can gain some assurance that you'll be treated reasonably.

Legitimate Web sites have a lot at stake in consumer confidence, so many participate in self-policing programs. Some submit to oversight by outside groups.

With that in mind, look for home pages with participation seals from such programs as BBB Online and WebTrust. Check out how others have graded companies through online surveyors such as and Consumer Reports Online's subscriber service, which costs $3.95 a month . See whether some of the prominent search engines such as Yahoo! and Netscape feature the e-retailers you're doing business with.

Understand that even third-party endorsements don't guarantee you won't have problems, but at least they suggest that someone else has examined the company and holds it accountable to certain minimum standards.

What about companies not affiliated with any third-party programs?
Scrutinize their Web sites for prominent, unambiguous statements about pricing and shipment policies, return and refund provisions, and privacy protections.

Note the company's name, address, and contact information. You might want to call the phone number to verify it. In addition, check up on the company at its local Better Business Bureau and its state consumer protection agency.

What if I can't find an address or phone number for a company?
Go to and enter the company's "domain name"—its main Internet address after the "www." That way, you can find the names, mailing addresses, and phone numbers of those who have registered for that Web site.

Use that information to get in touch with the company and, if necessary, to provide to authorities.

What if a company doesn't give me what I paid for?
If your shipment has taken more time than the company advertised (or more than 30 days, if it gave no deadline), contact the business to see what's up. The law says companies must tell you about delays and give you a chance to cancel your order for a refund.

If you can't reach the company and you paid by credit card, call your card issuer for help in getting your money back. If another company has taken over the online retailer you were using, ask the new owner how it will handle unfilled orders.

If the online company you dealt with seems to have vanished, use the contact information from the domain name registration to try to track the business down. Seek assistance from the Better Business Bureau closest to the company as well as state consumer protection agencies both where you are and where the online retailer was registered.

If the company has filed for bankruptcy court protection, you'll have to file a claim and get in line with other creditors, possibly waiting months or years before you can hope to get any money back—if there's any left.

How can I protect myself from the possibility of an online company folding?
Take great care where you shop online. Follow the guidelines above for gaining some assurance that the transaction will meet your reasonable expectations or that someone will be held accountable.

Pay by credit card. This makes your card issuer your ally. Should something go wrong, your card issuer can help. Remember that debit cards aren't the same as credit cards and don't carry the same protections.

Print out all your business transactions and keep files. Maintaining a paper trail in any transaction gives you a leg up on tracking your purchase and pursuing any error or wrongdoing throughout the process.

    Print out
    all your
    business transactions
    and keep files.

    If you paid
    by credit card,
    call your card issuer
    for help in
    getting your
    money back.

    Scrutinize Web sites
    for prominent,
    unambiguous statements
    about pricing and
    shipment policies,
    return and
    refund provisions,
    and privacy protections.

    The demise of an
    online merchant
    is difficult
    to forecast.

© 2000 Credit Union National Association Inc.