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Dealing With a Dead Dot-Com

Don't let a failed online store disappear with your money. Here's how to protect yourself.

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As an online shopper, you probably started out small, buying a book here or a couple of CDs there. As you became more confident, you progressed to using the Web to send flowers, fill prescriptions, and order groceries. These days you shop with abandon and snap up PCs, furniture, and other high-priced items from online companies you've never heard of.

Now is a good time to reconsider your carefree ways. A predicted shakeout among Internet retailers means you could pay dearly for sloppy shopping. Already this year, high-profile sites such as Petstore.com, Disney-owned Toysmart, and fashion site Boo.com have gone out of business.

The scariest part: The carnage may have only just begun. By the end of the year, analysts say, the investors backing some shopping sites could decide to cut their losses. "Amazon's getting beat up, and some people thought Buy.com was on the ropes," says IDC analyst Keith Wayras. But these electronic-commerce monoliths won't likely be the first to go. The businesses most likely to fail: small to medium-size online stores that sell common products, ranging from baby food and toys to sporting goods and travel tickets, for prices far below those of competitors. Moreover, an astounding three-quarters of online retail businesses in existence today will end up as worm food by 2002, according to Forrester Research.

Business-to-Business Can Also Go Under

Consumers aren't the only shoppers who need to be wary when buying online. Sites catering to businesses can also die, as Richard Middlebrook, an attorney in Bakersfield, California, found out.

This past January, Middlebrook hired PageRiver, a Web site design and hosting service in Nevada, to build a Web site for his law firm. Although initially put off by the company's request for a $500 payment up front, Middlebrook eventually signed on because the price was low. PageRiver delivered a crude template-based site, and Middlebrook asked for his money back. Four months later, the site and the company disappeared, and so did Middlebrook's investment. PC World was unable to reach PageRiver or its principals for comment.

Middlebrook says that he wasn't bothered by the loss of a few hundred dollars. "The thing that bothers me is that I've lost my faith in buying online. I thought I could trust a company online as well as I could a store down the street, but that's not true. I'll never buy again from anyone but a big name."

So What?

Soon, patronizing your favorite Web store could require nerves of steel. If you're lucky, a failed online store will do as CraftShop.com did, leaving the site up for a few days or weeks, giving you a chance to follow up on any outstanding orders. Even better, another company may take over operations and support the failed site's customers, as in the case of Petstore.com, purchased by Pets.com.

But you may just as likely plunk down $50 for flea collars and kibble at a bustling site one day, only to read the next day a polite note in the site's place directing you to an 800 number that doesn't work. No matter how noble its original intentions, when an online company croaks, you could lose your order, and possibly your money.

Brick-and-mortar stores can fail, too, but online customers face additional risk because sites often ask for payment in advance. The Web also exposes shoppers to hundreds more companies, many of them start-ups with lots of revenue but no profits whatsoever. You can maximize your chances of happy shopping on the Web in the coming months by following a few tips offered by industry analysts and consumer-protection experts. You've heard some before, but now is a good time to brush up on the basics.

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