10. TRUST IN CYBERSPACE
Trust is the grease in the wheels of commerce. Without it everything would grind to a halt. Fortunately, most people -- buyers and sellers -- are both trusting and trustworthy. But it is the few who spoil it for everyone else. So systems of commerce have evolved with various kinds of trust mechanisms to facilitate making transactions.
It is generally assumed that consumers look to brand names they know and trust. But there are now hundreds of thousands of commercial web sites. Setting aside the Fortune 500 and the like, most of the remaining 99.9 percent are not well-known, brand name commercial businesses. Instead they are small and medium size entities, and many more are sole proprietors selling their wares for the first time to a global marketplace. Much of what happens in e-commerce involves transactions between strangers.
Although the legal framework for commerce is important, it is not fail safe, as many consumers know. The role of trust in commercial transactions is really much more complicated than our confidence in legal recourse. A common feeling among those who are new to the web is a lack of trust in making purchases. This is quite natural. Buyers worry about the integrity of sellers: will the product arrive as advertised, will the seller stand by the warrantee, will there be recourse if not fully satisfied, and will payment information remain secure and private? Sellers must be concerned that the buyer is legitimate and the payment for goods or services rendered is drawn on a valid account.
Even so, in a very short time, millions of individuals have come together on the web to buy and sell all sorts of items, large and small, cheap and expensive. No where is this more true than at eBay, where each day countless items are auctioned off among veritable "strangers". At the core of how this is accomplished is something common to all commercial systems: trustworthy behavior is rewarded and untrustworthy behavior is penalized by the traditional process of communicating experiences from person-to-person. In e-commerce, reputation itself becomes a valuable commodity.
Reputation is formalized and amplified by trusted third-parties. Several organizations have formed to offer a "seal of approval" that will encourage trust among consumers, including TRUSTe. These are not in themselves perfect solutions. When it comes to large transactions, using an escrow service -- an independent third party which holds payment in trust until the buyer receives and accepts the item from the seller -- is another approach.
|Spoofing/Phishing||Spoofing is when a fraudster pretends to be someone else's email or web site. This is typically done by copying the web content of a legitimate web site to the fraudster's newly created fraudulent web site. Phishing refers to the scheme whereby the perpetrators use the spoofed web sites in an attempt to dupe the victim into divulging sensitive information, such as passwords, credit card and bank account numbers. The victim, usually via email is provided with a hyperlink that directs him/her to a fraudster's web site. This fraudulent web sites name (URL) closely resembles the true name of the legitimate business. The victim arrives at the fraudulent web site and is convinced by the sites content that they are in fact at the companys legitimate web site and are tricked into divulging sensitive personal information. Spoofing and phishing are done to further perpetrate other schemes, including identity theft and auction fraud.|
|Identity Theft||Identity theft occurs when someone appropriates another's personal information without their knowledge to commit theft or fraud. Identity theft is a vehicle for perpetrating other types of fraud schemes. Typically, the victim is led to believe they are divulging sensitive personal information to a legitimate business, sometimes as a response to an email solicitation to update billing or membership information, or as an application to a fraudulent Internet job posting.|
|Non-delivery of Goods/Services||Merchandise or services that were purchased or contracted by individuals on-line are never delivered.|
|Online Auction/Retail||The fraud attributable to the misrepresentation of a product advertised for sale through an Internet auction site or the non-delivery of products purchased through an Internet auction site.|
|Credit/Debit Card Fraud||
Is the unauthorized use of a credit/debit card to fraudulently obtain money or property. Credit/debit card numbers can be stolen from unsecured web sites, or can be obtained in an identity theft scheme.
|Advance-Fee Fraud Schemes||
The victim is required to pay significant fees in advance of receiving a substantial amount of money or merchandise. The fees are usually passed off as taxes, or processing fees, or charges for notarized documents. The victim pays these fees and receives nothing in return. Perhaps the most common example of this type of fraud occurs when a victim is expecting a large payoff for helping to move millions of dollars out of a foreign country. The victim may also believe he has won a large award in a nonexistent foreign lottery.
The receiving and subsequent reshipping of on-line ordered merchandise to locations usually abroad. Individuals are often solicited to participate in this activity in chat rooms, or through Internet job postings. Unbeknownst to the reshipper, the merchandise has been paid for with fraudulent credit cards.
|Source: F.B.I., Internet Crime Complaint Center.|
Things to read:
Leap of Faith: Using the Internet Despite the Dangers
Consumer Reports | 10.25.2005
Most Trusted Companies for Privacy
TRUSTe | 09.20.2005
Consumer Fraud in the United States: An FTC Survey
Keith B. Anderson | 08.05.2004
Economics of Trust in the Information Economy
Gerardo A. Guerra, Daniel J. Zizzo, William H. Dutton and Malcolm Peltu | 04.01.2003
Securing Trust Online: Wisdom or Oxymoron?
Helen Nissenbaum | 07.24.2001
Anatomy of a Phishing Attack
Tod Beardsley | 02.02.2005
Things to watch:
The Critical Role of Trust in Human Relations
David Baltimore | 02.19.2002
Trust in Cyberspace
Brian P. Bailey, Laura J. Gurak and Joseph A. Konstan
How Effective are Electronic Reputation Mechanisms?
Gary E. Bolton, Elena Katok and Axel Ockenfels
Users and Trust in Cyberspace
Pekka Nikander and Kristiina Karvonen
A Matter of Trust What Users Want From Web Sites
Trust Services: A Trust Infrastructure for E-Commerce
Adrian Baldwin, et al.
Trust Among Strangers in Internet Transactions
Paul Resnick and Richard Zeckhauser
Building Trust Online
Sandeep Dayal, Helene Landesberg, and Michael Zeisser
E-Commerce: The Issues and Challenges of Creating Trust
An Empirical Study of the Causal Antecedents of Customer Confidence in E-tailers
The Essential Role of Trusted Third Parties in E-Commerce
Consumer Trust in an Internet Store
Sirkka L. Jarvenpaa and Noam Tractinsky
Why Some Companies Are Trusted and Others Are Not: A Harris Poll
Places to visit:
Anti-Phishing Working Group
Free Annual Credit Report Online
National Fraud Information Center
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