Trust in E-Commerce

1. Trust in E-Commerce

2. Introduction • Trust & Risk • Strategic Thrusts • Framework of Trust • Conclusion • Related Web Sites • Questions

3. What is Trust? Definition “the assured reliance on the character, ability, strength, or truth of someone or something, or one in which confidence is placed”. Trust & Risk Web Sites Questions

4. The above cartoon by Peter Steiner has been reproduced from page 61 of July 5, 1993 issue of The New Yorker, (Vol.69 (LXIX) no. 20)only for academic discussion, evaluation, research.

5. On the Internet nobody knows you are a dog Tuesday, July 27, 2004 Fascinating how this famous cartoon from The New Yorker cartoon is proving less true as more and more folks get Weblogs. Weblogs give us an insider view of corporations and let us learn more about the individuals. Could the day arrive when we know for sure if you're a dog or not? Quote From Jeff Sandquist.com

6. 'Who are you?' said the Caterpillar. This was not an encouraging opening for a conversation. Alice replied, rather shyly, 'I - I hardly know, sir, just at present - at least I know who I was when I got up this morning, but I think I must have been changed several times since then.' —"Alice's Adventures in Wonderland", Lewis Carroll. Who are you?

7. Identity (brick & mortar store) Immediacy (physically touch the product) Value (can evaluate since close at hand) Discourse (talk to a salesman in person) Community (words of mouth) Privacy (pay cash) In the traditional setting, handshaking often symbolizes a transaction In the Internet context, it is not possible Trust in Traditional Commerce Trust & Risk Strategic Thrusts Framework Conclusion Web Sites Questions

8. Is the site professional? Does the information architecture make sense? Is the site easy to navigate? Is the site easy to use? Are my questions answered? Do other people trust this site? Am I familiar with this company? Are the prices reasonable? What Consumers Look For to Evaluate Trustworthiness online Strategic Thrusts Framework Conclusion Web Sites Questions

9. Trust is not associative (non-symmetric) Trust is not transitive Trust is always between exactly 2 parties Trust will involve either direct trust or recommender trust Some Properties of Trust Trust & Risk Strategic Thrusts Framework Conclusion Web Sites Questions

10. Trust and risk are closely interrelated Risk is defined as a consumer’s perception of the uncertainty and adverse consequences of engaging in an activity When risk is present, trust is needed to make transactions possible Doing business on the Internet has many additional risks Trust and Risk Introduction Strategic Thrusts Framework Conclusion Web Sites Questions

11. Some of the things to consider when sending emails are discussed in this ZDNET article. Email – Best Practice

12. Open source software is based on trust e.g. Mozilla Wikis Blogs How else can you collaborate? Collaboration and Trust

13. Financial (risk of losing money or paying too much) Functional (risk of receiving the wrong or a malfunctioning product) Social (risk of using a product that reflects poorly on its user) Physical (risk that we might be harmed by the product) Higher consumer trust towards an Internet store will reduce the perceived risks associated with buying from that store Four Types of Risk Introduction Strategic Thrusts Framework Conclusion Web Sites Questions

14. Reputation and size are key factors Long term reputation is far more than short-term product quality movements Reputation and size provide assurances Assurances help to increase trust, particularly when parties have not interacted before and do not have first hand knowledge of each other The store’s perceived reputation is positively associated with a consumer’s trust in an Internet store The store’s perceived size is positively associated with a consumer’s trust in an Internet store Factors of Trust Introduction Strategic Thrusts Framework Conclusion Web Sites Questions

15. Higher consumer trust toward an Internet store will generate more favourable attitudes towards shopping at that store The lower the consumer’s perceived risk associated with buying from an Internet store, the more favourable the consumer’s attitudes towards shopping at that store Favourable attitudes towards an Internet store will increase the consumer’s willingness to purchase from that Internet store Reduced perceived risks associated with buying from an Internet store will increase a consumer’s willingness to purchase from that Internet store Outcomes of Trust Introduction Strategic Thrusts Framework Conclusion Web Sites Questions

16. Five key strategic thrusts: Establishing a secure e-Commerce environment Building confidence in E-businesses Building confidence in consumers to transact on the Internet; and Educating and increasing awareness of the benefits of E-Commerce Best practices for E-Commerce to increase trust Key Strategic Thrusts to Build a framework of trust Introduction Trust & Risk Framework Conclusion Web Sites Questions

17. People need to be confident of the identity of the person sending electronic messages, to be sure that they have not been tampered with, and that they have been kept confidential. Senders would want to be able to identify the recipients of the messages, to ensure that they will not land on the hands of the unauthorized. Secure electronic transactions can be provided through the use of encryption technologies and certification authorities. Establishing a secure E-Commerce Environment Introduction Trust & Risk Framework Conclusion Web Sites Questions

18. Approaches Security Secure Socket Layer S-HTTP, s/MIME Identification Challenge-Response System Authentication Secure Electronic Transaction (SET) Secure Electronic Payment Protocol (SEPP) Secure Transaction Technology (STT) PKI/Digital Certificates Authorization Open Profiling Standard for Authorization and Single Sign-On (OPS) Establishing a secure E-Commerce Environment Introduction Trust & Risk Framework Conclusion Web Sites Questions

19. Risk is unavoidable, but doing E-Business is perceived to have greater risks. Some banks impose higher transactional fees for online payments (risk premium) E-Merchants are required a fixed term (e.g. six month) deposit to cover possible charge backs arising from online transactions. Approach: Risk Assessment and Profiling Establishing a secure E-Commerce Environment Introduction Trust & Risk Framework Conclusion Web Sites Questions

20. E-Commerce brings about new markets, more customers and global reach. Businesses are hesitant to exploit opportunity which can be accompanied with an increased risk of network fault, online fraud and crime. Businesses also worry about capital investment that might become outdated through rapid technological obsolescence. Approach: Introducing E-Commerce Insurance & Underwriters Building Confidence in E-Business Introduction Trust & Risk Framework Conclusion Web Sites Questions

21. When a credit card fraud occurs, the e-business will lose its good, be charged for the costs and have to pay the issuing bank a charge-back fee Online consumers also face the risk that they may not receive the goods, the goods that arrived are not what they had ordered or the goods are damaged upon receipt and even DOA (dead on arrival). Approach: Escrow Services Building Confidence in E-Business Introduction Trust & Risk

22. There will be potential e-disputes when doing business online, thus there is a need for an alternative dispute resolution process to allow businesses and consumers to have access to an independent and efficient way of resolving complaints. Approach: Alternative Dispute Resolution (ADR) Mechanisms Building Confidence in E-Business Introduction Trust & Risk Framework Conclusion Web Sites Questions

23. For consumers to transact on the Internet, they must have trust that the site keeps information private and offers a secure site for them to purchase products Consumers fear the risk of financial losses due to theft or fraudulent use of credit cards, or orders that disappear and products that never arrive. Approach: Trust Marks Building User Confidence in E-Commerce Transactions Introduction Trust & Risk Framework Conclusion Web Sites Questions

24. Verisign has developed and is promoting a set of principles and criteria (On-Line Privacy, Security, Business Practices and Transaction Integrity, Availability, WebTrust for Certification Authorities) Independent auditing can provide assurance services to evaluate and test whether a particular E-Commerce site meets these principles and criteria The WebTrust seal of assurance can be displayed on the E-Commerce site if it meets these principles and criteria Example site: eBay, Commonwealth Bank Building User Confidence in EC Transactions - WebTrust Introduction Trust & Risk Framework Conclusion Web Sites Questions

25. http://www.eBay.com.au http://www.anz.com.au http://www.ozrural.com http://www.paypal.com.au Introduction Trust & Risk Framework Conclusion Web Sites Questions

26. Reliability Seal Program Makes a commitment to high levels of ethical business practices and customer satisfaction. Has been in business for more than a year. Has a satisfactory record with the Better Business Bureau. Commits to work with its customers and the Better Business Bureau to resolve disputes that might arise. Privacy Seal Program The BBBOnLine Privacy program was developed specifically to help business web sites address this key concern of online shoppers. Example site: Dell Computer Building User Confidence in EC Transactions - BBBOnline Introduction Trust & Risk Framework Conclusion Web Sites Questions

27. See Dell BBonline Trust e Verisign See Nikon bonded information Introduction Trust & Risk Framework Conclusion Web Sites Questions

28. Deals with privacy concerns of users. Its goal is to provide: Online consumers with control over their personal information Internet publishers with a standardized, cost-effective solution for both satisfying the business model of their site and addressing consumers’ anxiety over sharing personal information online TRUSTe seal will take users directly to a company’s privacy statement Example site: MSN Building User Confidence in EC Transactions - TRUSTe Introduction Trust & Risk Framework Conclusion Web Sites Questions

29. Program Principles: Adopting and implementing a privacy policy that factors in the goals of the individual web site as well as consumer anxiety over sharing personal information online Posting notice and disclosure of collection and use practices regarding personally identifiable information via a posted privacy statement Giving users choice and consent over how their personal information is used and shared Putting data security and quality, and access measures in place to safeguard, update and correct personally identifiable information Building User Confidence in EC Transactions - TRUSTe Introduction

30. Minimum requirements of the TRUSTe privacy statement: What personal information is being gathered Who is collecting the information How the information will b used With whom the info will be shared with The choices available to users regarding collection, use, and distribution of their info The security procedures in place to protect personal info from loss misuse, or alternation How users can update or correct inaccuracies in their pertinent info Building User Confidence in EC Transactions - TRUSTe Introduction Trust & Risk Conclusion Web Sites Questions

31. TRUSTe Oversight: Initial and Periodic Review Review website for adherence to the TRUSTe principles, privacy statement requirements and trustmark usage. Seeding TRUSTe submits unique user information and monitor results for any wrongdoing Online Community Monitoring The ability of the community at-large to report violations by establishing online Watchdog reporting form for users. Licensee privacy statement must also display the TRUSTe “click to verify seal” which links to a verification page located on TRUSTe’s secure server. Building User Confidence in EC Transactions - TRUSTe Introduction Trust & Risk Framework Web Sites

32. TRUTEe Resolution Process Request users to contact website directly before filing a report with TRUSTe If there is no satisfactory response, TRUSTe steps in as the liaison between the consumer and website to resolve the issue. If the website is in violation and is verified by TRUSTe’s official auditors, TRUSTe will advise and guide the licensee on the steps to remedy the problem If no action taken, then it will result in revocation of the TRUSTe trustmark Building User Confidence in EC Transactions - TRUSTe Introduction Trust & Risk Web Sites Questions

33. Issues Narrow Focus Web only, what about e-mail and other channels? Potential conflict of interest Depends on corporate sponsors which are also users of TRUSTe Self violation Allowed a third party – thecounter.com – to track visitors to its web site through a collection of personally identifiable information Building User Confidence in EC Transactions - TRUSTe Introduction Framework Web Sites

34. The ease with which personal information can be disseminated with the proliferation of IT has raised privacy concerns worldwide. Approaches: Addressing privacy concerns - Policy for Cookies should be made known to the users - Policies regarding any practices that involve using record of user accesses for statistics generation and/or debugging, should also made known to the users - Platform for Privacy Preferences Project (P3P) Building User Confidence in E-Commerce Transactions Introduction Trust & Risk Framework Questions

35. P3P (W3C’s Platform for Privacy Preferences Project): A framework for informed Internet interactions. The goal of P3P is to enable Internet sites to express their privacy practices and users to exercise preferences over those practices Approach: Each Internet site has a proposal for privacy policies. If a proposal matches the user’s preference via WWW user-agents, then accept. Otherwise, reject. Sites can use P3P to increase the level of confidence Building User Confidence in E-Commerce Transactions Introduction Trust & Risk Web Sites

36. Approaches: The government introduces initiatives to help educate and increase awareness of E-Commerce for the businesses and consumers. Encouraging the fostering of an e-lifestyle amongst the people Creating E-Commerce awareness through seminars targeting at businesses Publicly awarding businesses that adopted E-Commerce successfully Educating and Increasing Awareness of the Benefits of E-Commerce Introduction Trust & Risk Profile Conclusion

37. Seals of Approval: Re-assure the consumers that security has been established Brand: The E-Merchant’s promise to deliver specific attributes and its credibility based on reputation & consumers’ previous experience Navigation: Ease of finding what the consumers want Fulfillment: Clearly indicates how orders will be processed, and provides information on how to seek recourse if there are problems Presentation: Design attributes that exhibit quality and professionalism Technology: State of the art even it is expensive and difficult to use Best Practices for E-Businesses to Increase Trust Introduction Trust & Risk Framework Conclusion Web Sites Questions

38. Introduction Putting all the key strategic thrusts together To build a framework of trust Gartner Article (Lost Sales) Trust & Risk Strategic Thrusts Conclusion Web Sites Questions

39. An Online Trust Framework (Simple Model) Introduction Trust & Risk Strategic Thrusts Conclusion Web Sites Questions

40. Technology Dimension Security, Authentication, Identification, Authorization Non-repudiation Confidentiality of Transactions Tools PKI/Digital Certificates Challenge Response SSL, S/MIME SET, SEPP, STT, OPS Key Strategic Thrust: To establish a secure E-Commerce Environment A Framework of Online Trust Introduction Trust & Risk Strategic Thrusts Conclusion Web Sites Questions

41. Market Place Dimension Privacy Services (e.g. P3P) Alternative Dispute Resolution (ADR) Mechanisms E-Commerce Insurance & Underwriters Escrow Services Credit Bureau Services Alternative Dispute Resolution (ADR) Mechanisms Trust Marks Key Strategic Thrusts: To build confidence in EC To build user confidence in EC Transactions Best Practices A Framework of Online Trust Introduction Strategic Thrusts Conclusion Web Sites

42. Market Participant Dimension Risk Assessment & Profiling Fostering e-commerce lifestyle, e-commerce seminars for consumers, etc. Brand, Effective Navigation, Fulfillment & Presentation Key Strategic Thrusts: To establish a secure E-Commerce Environment, To build confidence in EC To build user confidence in EC Transactions To educate and Increasing Awareness of the Benefits of E-Commerce Best practices A Framework of Online Trust Introduction Conclusion Web Sites

43. Consistent Legal Framework is important Country specific but EC is global Conflicting views create confusion and friction in the E-Commerce A sound global legal framework plays a vital role in restoring confidence in the mind of customers. Approach: United Nation’s Committee on International Trade and Law (UNCITRAL) should take initiative to find a global acceptable solution for the legal framework A Legal Framework Introduction Web Sites Questions

44. A detailed Online Trust Framework Introduction Trust & Risk Strategic Thrusts Conclusion Web Sites Questions

45. Going beyond commerce, who do you trust? Consider this map Next week…. Web 2.0 – YOU as the new dimension