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Trust in ECommerce

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'the assured reliance on the character, ability, strength, or truth of someone or ... TRUSTe submits unique user information and monitor results for any wrongdoing ... – PowerPoint PPT presentation

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Title: Trust in ECommerce


1
McMaster University Business K778 Seminar
Trust in E-Commerce Isaac Wong March 26, 2002
2
AGENDA
3
Introduction
  • 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
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
4
  • Trust in Traditional Commerce

Introduction
  • 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 Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
5
  • What Consumers Look For to Evaluate
    Trustworthiness online

Introduction
Trust Risk
  • 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
6
Introduction
  • 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
7
  • Trust and Risk

Introduction
Trust 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
8
  • Four Types of Risk

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

Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
9
  • Factors of Trust

Introduction
Trust Risk
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
10
Introduction
  • Outcomes of Trust

Trust Risk
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
11
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
12
  • 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.

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
13
  • 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)

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
14
  • Establishing a secure E-Commerce Environment

Introduction
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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
15
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
16
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
17
  • Building Confidence in
  • E-Business

Introduction
Trust Risk
  • Due to the faceless nature of E-Commerce
    transactions, the transacting parties on both
    sides do not know each other and have no
    information on the credit worthiness of the other
    party
  • Approach Introducing Credit Bureau Services

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
18
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
19
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
20
  • Building User Confidence in EC Transactions -
    WebTrust

Introduction
Trust Risk
  • The public accounting profession (AICPA CICA)
    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)
  • CPA CA 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 Bell Canada

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
21
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
22
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
23
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
24
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
25
  • 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
    companys privacy statement
  • Example site MSN

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
26
  • Building User Confidence in EC Transactions -
    TRUSTe

Introduction
Trust Risk
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
27
  • 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 be 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
28
  • 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 TRUSTes secure server.

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
29
  • 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
    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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
30
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
31
  • Building User Confidence in EC Transactions -
    TRUSTe

Introduction
Trust Risk
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
32
  • 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)

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
33
  • Building User Confidence in E-Commerce
    Transactions

Introduction
Trust Risk
  • 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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
34
  • Educating and Increasing Awareness of the
    Benefits of E-Commerce

Introduction
Trust Risk
Strategic Thrusts
  • 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
Web Sites
Questions
35
  • 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-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

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
36
Introduction
Trust Risk
  • Putting all the key strategic thrusts together
  • To build a framework of trust

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
37
  • A Framework of Online Trust

Introduction
Trust Risk
  • Technology Dimension
  • Market Place Dimension
  • Market Participant Dimension
  • Supported by a legal framework

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
38
An Online Trust Framework (Simple Model)
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
39
  • 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
Framework
Conclusion
Web Sites
Questions
40
  • 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
  • Alternative Dispute Resolution (ADR) Mechanisms
  • Trust Marks
  • Key Strategic Thrusts
  • To build confidence in EC
  • To build user confidence in EC Transactions
  • Best Practices

Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
41
  • 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

Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
42
A Legal Framework
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

Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
43
A detailed Online Trust Framework
Introduction
Trust Risk
Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
44
Introduction
  • Conclusion

Trust Risk
  • The issue of trust in E-Commerce is fundamental
    to its eventual success
  • If consumers cannot trust that personal
    information is safe and secure, the Internet will
    never reach its economic potential
  • In the faceless world of E-Commerce, consumers
    need the assurance of a sound framework for
    fostering online trust

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
45
  • Related Web Sites for online Trust

Introduction
Trust Risk
  • Trust Marks
  • TRUSTe
  • http//www.truste.com
  • WebTrust
  • http//www.cpawebtrust.org
  • BBBOnline
  • http//www.bbbonline.org

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
46
  • Related Web Sites for Cyber Crimes

Introduction
Trust Risk
  • Discussion Papers on e-Trust
  • Online Trust in Business-to-Business E Commerce
    (Mahadevan Venkatesh) http//unix2.iimb.ernet.in
    /mahadev/trust1.pdf
  • A Proposed Framework on Building Trust and
    Confidence in Electronic Commerce (IDA,
    Singapore) http//www.ida.gov.sg/Website/IDAhome.n
    sf/Home?OpenForm

Strategic Thrusts
Framework
Conclusion
Web Sites
Questions
47
Introduction
Trust Risk
Strategic Thrusts
  • Questions???

Framework
Conclusion
Web Sites
Questions
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