ShopShield lets you shop online without giving away your identity

Somewhere around 25 million people have been been hit with identity theft. But it’s hard to protect your confidential data against determined criminal hackers, who are stealing credit card numbers and other private information by the millions.

Shop Shield, created by a startup called Kemesa, has a smart way to solve this problem. The Aventura, Fla.-based company is launching Shop Shield today in an effort to head off identity theft before it has a chance to happen, said Steve Bachenheimer, chief executive officer of Kemesa (short for Keep me safe). The trick is to not leave a trace.

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Shop Shield does that by giving you a single secure login. You sign into that account and then, whenever you are visiting a web site where you want to buy something, Shop Shield will take over for you. It will run a routine that replaces your personal and financial information with anonymous, untraceable data which is used to compete your purchase or otherwise register you to access a site.

Your information can’t be stolen (at least not as easily) because it is never revealed to the web site during the online transaction. You never send your email address, passwords, phone numbers, billing information, credit card number, or even your name. Of course, you don’t want your Shop Shield username and password to be stolen. (The company says its own site has been attacked 1.6 million times since January, but no data has been stolen).

Here’s more on how it works: The Shop Shield Companion will automatically enter anonymous data into the fields that web sites request when you’re buying something. Shop Shield securely monitors and stores all transaction details. The Companion can also be launched manually at any site by clicking on the Shop Shield icon in the browser tool bar. When you are at a computer that doesn’t have the Companion installed, you can go directly to the www.shopshield.net site to log in. You can choose the form of payment you want. Shop Shield creates a brand new email address and password where the web site can send verification data. When you log into Shop Shield on your own account, you get to see those emails to verify the transactions. A summary report tells you all the details of the transactions that are handled in your name. If you need to call the merchant back because your stuff never arrived, you can tell the customer service agents the relevant information in the email verifications.

Shop Shield works at nearly every web merchant and bill pay site where credit cards are accepted, including most of the top 500 web retailers. It can also be used to register you at sites that ask for your name, such as The New York Times. You can use a one-time payment — created by Shop Shield with anonymous data just for your use — that works only once, or you can use reusable credit cards on sites that you visit frequently. It stays out of your way until you need to do a transaction.

One of the side benefits is that Shop Shield can stop the spread of viruses, spam, and phishing (attacks meant to trick you into revealing your personal data). That’s because it will automatically recognize phishing sites and stop you from logging into them or sharing information with them. All incoming messages related to transactions are also scrubbed for malware before they are forwarded on to your inbox.

The company showed me how it works in a demonstration where it set up a temporary account on Overstock.com in a matter of seconds. You can subscribe to the service for $9.99 a month. Or you can pay on a transaction basis, with transaction fees ranging from 99 cents to $1.99.

The service is the brainchild of Bachenheimer, who started the company in 2004 after he heard the story of a friend whose daughter was jailed on a drunk driving charge. It took four years to clear the daughter’s name and establish that she was a victim of identity theft.

There is competition out there: Paypal, Google Checkout, Norton 360 and others. But as the company’s comparison chart shows, no one does everything that Shop Shield does. To get the same kind of protection, Bachenheimer says you have to use four or five services.

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The company has 12 employees (and about 15 more contractors) and has raised $5.2 million in angel money from 14 unnamed investors. The company filed for patent protection starting in 2005. The company plans to raise an institutional round of money by early next year. By that time, Bachenheimer said he hopes to have six months of customer traction. So far, a pilot test showed that 72 percent of consumers who tried out the service decided to use it.

Kemesa has secured a pretty good endorsement for Shop Shield. The Identity Theft Resource Center has said it has the recommended performance characteristics to be classified as a “secure payment agent.” It’s also certified by auditing authorities including VeriSign and Trustwave. That’s because Shop Shield stores your data in fragments which are recalled as needed; if stolen, the data is meaningless. The Shop Shield service is available now for a free 60-day trial for Firefox web browser users. An Internet Explorer version will be available later. The Mac version requires Mac OS X and Firefox 3.0 or higher. Here’s a video that shows how it works.