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

8. 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?
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
If they can’t design a good site professionally, why expect them to be able to handle commerce transactions and fulfillment?
If the organization of information does not appear to have been carefully designed, why expect the payment systems good?
Can I find the product that I want? If the site is not easy enough to navigate around, why would I trust them to have made a backend that works?
Can I search, browse, and purchase from the site? If I can’t because of my browser and preferred browser configuration, then the site designers are telling me that they don’t want my business
If I’m concerned about security and privacy, can I find information that addresses these concerns? If they can’t address my possible needs before hand, why expect them to handle my needs after the purchase?
What’s the word (of mouse) about the site?
Have I had good experiences with this company before, on or off the web?

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

10. Trust and Risk Trust and risk are closely interrelated
Introduction
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
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions

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

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

13. Four Types of Risk Financial (risk of losing money or paying too much)
Introduction
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
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions

14. Factors of Trust Reputation and size are key factors
Introduction
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
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions

15. Outcomes of Trust
Introduction
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
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions

16. Key Strategic Thrusts to Build a framework of trust
Introduction
Trust & Risk
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
Framework
Conclusion
Web Sites
Questions

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

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

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

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

21. Building Confidence in E-Business
Introduction
Trust & Risk
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

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

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

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

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

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

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

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

29. Building User Confidence in EC Transactions - TRUSTe
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

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

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

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

33. Building User Confidence in EC Transactions - TRUSTe
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
Framework
Web Sites

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

35. Building User Confidence in E-Commerce Transactions
Introduction
Trust & Risk
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
Web Sites

36. Educating and Increasing Awareness of the Benefits of E- Commerce
Introduction
Trust & Risk
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
Profile
Conclusion

37. Best Practices for E-Businesses to Increase Trust
Introduction
Trust & Risk
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
Framework
Conclusion
Web Sites
Questions

38. Putting all the key strategic thrusts together
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. A Framework of Online Trust
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

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

42. A Framework of Online Trust
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

43. A Legal Framework Consistent Legal Framework is important
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 Nation’s Committee on International Trade and Law (UNCITRAL) should take initiative to find a global acceptable solution for the legal framework
Web Sites
Questions

44. A detailed Online Trust Framework
Introduction
Trust & Risk
Strategic Thrusts
Conclusion
Web Sites
Questions
The Internet is an open network and there are various risk elements faced by both business users and consumers. To address these risks and instil a higher level of trust in doing online transactions, the adoption of PKI will provide higher level of security on the Internet.
However, there are many obstacles in adopting PKI, including a lack of demand from users, lack of applications supporting PKI, system complexity, difficulty of use and costs.
Government can set guidance and also promote cross-certification efforts with other countries

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