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Trust in E-Commerce Topic 9. Introduction Trust & Risk Strategic Thrusts Framework of Trust Questions Conclusion Related Web Sites.

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Presentation on theme: "Trust in E-Commerce Topic 9. Introduction Trust & Risk Strategic Thrusts Framework of Trust Questions Conclusion Related Web Sites."— Presentation transcript:

1 Trust in E-Commerce Topic 9

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

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 Quote From Jeff Sandquist.com 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?

6 Who are you? '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.

7 Trust & Risk Strategic Thrusts Conclusion Web Sites Questions Framework Trust in Traditional Commerce 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

8 Strategic Thrusts Conclusion Web Sites Questions Framework What Consumers Look For to Evaluate Trustworthiness online 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?

9 Trust & Risk Strategic Thrusts Conclusion Web Sites Questions Framework Some Properties of Trust 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

10 Introduction Strategic Thrusts Conclusion Web Sites Questions Framework Trust and Risk Trust and risk are closely interrelated Risk is defined as a consumers 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

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

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

13 Introduction Strategic Thrusts Conclusion Web Sites Questions Framework Four Types of Risk 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

14 Introduction Strategic Thrusts Conclusion Web Sites Questions Framework Factors of Trust 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 stores perceived reputation is positively associated with a consumers trust in an Internet store The stores perceived size is positively associated with a consumers trust in an Internet store

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

16 Introduction Trust & Risk Conclusion Web Sites Questions Framework Key Strategic Thrusts to Build a framework of trust Five key strategic thrusts: 1.Establishing a secure e-Commerce environment 2.Building confidence in E-businesses 3.Building confidence in consumers to transact on the Internet; and 4.Educating and increasing awareness of the benefits of E-Commerce 5.Best practices for E-Commerce to increase trust

17 Introduction Trust & Risk Conclusion Web Sites Questions Framework Establishing a secure E- Commerce Environment 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.

18 Introduction Trust & Risk Conclusion Web Sites Questions Framework Establishing a secure E- Commerce Environment 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)

19 Introduction Trust & Risk Conclusion Web Sites Questions Framework Establishing a secure E- Commerce Environment 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

20 Introduction Trust & Risk Conclusion Web Sites Questions Framework Building Confidence in E-Business 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

21 Introduction 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 Trust & Risk Building Confidence in E-Business

22 Introduction Trust & Risk Conclusion Web Sites Questions Framework Building Confidence in E-Business 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

23 Introduction Trust & Risk Conclusion Web Sites Questions Framework Building User Confidence in E-Commerce Transactions 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

24 Introduction 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 Trust & Risk Conclusion Web Sites Questions Framework Building User Confidence in EC Transactions - WebTrust

25 Introduction Trust & Risk Conclusion Web Sites Questions Framework

26 Introduction Trust & Risk Conclusion Web Sites Questions Framework Building User Confidence in EC Transactions - BBBOnline 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

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

28 Introduction 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 companys privacy statement Example site: MSN Trust & Risk Conclusion Web Sites Questions Framework Building User Confidence in EC Transactions - TRUSTe

29 Introduction 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

30 Introduction 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 Trust & Risk Conclusion Web Sites Questions Building User Confidence in EC Transactions - TRUSTe

31 Introduction 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 TRUSTes secure server. Trust & Risk Web Sites Framework Building User Confidence in EC Transactions - TRUSTe

32 Introduction 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 TRUSTes 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 Trust & Risk Web Sites Questions Building User Confidence in EC Transactions - TRUSTe

33 Introduction Issues Narrow Focus –Web only, what about 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 Web Sites Framework Building User Confidence in EC Transactions - TRUSTe

34 Introduction 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) Trust & Risk Questions Framework Building User Confidence in E-Commerce Transactions

35 Introduction P3P (W3Cs 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 users preference via WWW user-agents, then accept. Otherwise, reject. Sites can use P3P to increase the level of confidence Trust & Risk Web Sites Building User Confidence in E-Commerce Transactions

36 Introduction Approaches: The government introduces initiatives to help educate and increase awareness of E-Commerce for the businesses and consumers. 1.Encouraging the fostering of an e- lifestyle amongst the people 2.Creating E-Commerce awareness through seminars targeting at businesses 3.Publicly awarding businesses that adopted E-Commerce successfully Trust & Risk Conclusion Profile Educating and Increasing Awareness of the Benefits of E- Commerce

37 Introduction Seals of Approval: Re-assure the consumers that security has been established Brand: The E-Merchants 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 Trust & Risk Conclusion Web Sites Questions Framework Best Practices for E-Businesses to Increase Trust

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

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

40 Introduction 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 Trust & Risk Strategic Thrusts Conclusion Web Sites Questions A Framework of Online Trust

41 Introduction 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 Strategic Thrusts Conclusion Web Sites A Framework of Online Trust

42 Introduction 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 Conclusion Web Sites A Framework of Online Trust

43 Introduction 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 Nations Committee on International Trade and Law (UNCITRAL) should take initiative to find a global acceptable solution for the legal framework Web Sites Questions A Legal Framework

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

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


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