IntroductionAdvancement in technology has introduced the fundamental services of business; buying and selling to be operated from computer programs for example most transactions that go on in a banking hall rely on computers programs. The electronic business transaction system which involved electronic data interchange (EDI) and electronic funds transfer (EFT)was introduced in the 1970s by Michael Aldrich to ease and quicken the process for provision of goods and services (Goel, 2007). Internet services that are among the key resources of a business have seen to the rise of e-commerce industry which involves conducting business transaction through the internet or other computer networks.
The payment system used in online transaction process (OLTP) directly connects to the customer’s bank account or credit card Company to get automatic payment for the services or goods provided. The process is programmed to detect any fraud activities or insecure authorization during the transaction process to ensure that payment for provision of products is done. In the 1980s there was the development of automated teller machines (ATM) and credit cards that were mainly used by airline companies to make reservations for example Sabre airline company in USA and Travicom airline company in UK and auto manufacturing companies like Ford, Nissan and General motors (Goel, 2007). In the 1990s many business organizations incorporated electronic commerce into their business system to aid in enterprise resource planning systems (ERP) which involves managing and coordination of the business’s resources to enable smooth running of the business as any problem experienced can be detected through this systems for example shortage in materials, data storage and retrieval processes (Goel, 2007).
Before 1991, Internet electronic commerce was highly prohibited due to the security risks that involved fraud activities. Internet e-commerce greatly improved business activities as consultancy services could now be done through the internet thus increasing the scope of customers for the business (Goel, 2007). Development of security protocols and DSL programs that helped businesses to remain connected to the internet for a long period of time had take effect by the end of the year 2000 resulting to a lot of businesses in America and Europe to incorporate electronic commerce into their business structures (Goel, 2007).This has resulted into the development of online transaction processes which is among the main module of business transactions that companies engage in.
The government has formulated commissions whose responsibility is to regulate online e-commerce industry through mandate policies that aid in effective online transactions such as online advertisement. The policies also help to curb fraud cases and provide the customers with privacy from reveling their personal information like account passwords and secret codes (Goel, 2007).Online transaction processes seems to gain popularity because more customers are relying on this mode of transaction to carry out their purchases as it is simplified, fast and efficient. Statistics collected by Dan Hess and Graham Mudd the vice president and analyst of comServe respectively display a very big margin of growth of online shopping in the year 2004 which was 26% (USD65 billion) higher than the previous year (Maguire, 2005).
There is potential market for new e-tailers to engage in e-tailing activities as the demand for online shopping is steadily growing. Unlike in the past the likelihood of customers shopping online to do their businesses with new companies enlisted in the internet is high as a plethora of surveys documented show that 75% of online shoppers like to try the products offered by new e-tailers (Maguire, 2005). Back in the days new e-tailers did not stand a chance of surviving as online shoppers trusted the merchants that were already established as it is depicted in reports that 81% of the shoppers did all their purchasing activities with the companies that were already enlisted in the internet (Maguire, 2005).The young generation of America’s population especially the men constitute the higher percentage of the online shoppers as they put their trust on the services provided more than the old people.
They are also more conversant with information technology than the old people. In the future e-tailers will experience stiff competitions from the companies providing the same product because in e-commerce industry price is the indicating factor of purchase unlike in offline transactions where brand is the determining factor. Growth in economic statues and stability of the American economy will lead to more dependence on online shopping as people will be more financially stable and technologically advanced (Laudon ; Guercio 2001).Problems of E-Commerce IndustryElectronic Commerce industry is gaining popularity over the other ordinary type of business because it is not time consuming and customers do not have to face the hassle of line-up and parking lot as the products offered can be accessed from the comfort of their homes.
Online transaction method is more appealing as the customer has a peace of mind while engaging in this activity unlike when shopping in the business premises which are chaotic and operate under sub-zero room temperatures. Customers prefer online shopping than offline shopping as the services provided fulfill most of the interpersonal skills that meet their requirements and attracts them. The e-tailers have an advantage over the retailers of increasing the number of sales and the scope of their customers because they provide 24hour services and have a better chance of diversifying their market. The e-tailers also reduce their overall expenses as they do not require complex staffing strategies that will cost their businesses a fortune, they are able to serve their customers who are not in a possibility to visit the store or are based in the remote areas and poor management and communication skills are eliminated as the e-tailers establish a reliable customer consultancy service to their customers (Goel, 2007).
Although online shopping solves most hurdles that result from physically shopping activities it also presents some glitches that do not occur in offline shopping activities. For instance the possibility of customers purchasing the wrong item is higher as they may unconsciously click on the wrong item, the customers may choose a size or color of item that they did not desire or pass the wrong information such as wrong codes to the customer service when placing their orders, the customers do not physically handle the products they want to buy but rely on a third party to ship their products. An event of receiving the wrong item may arise if the third party ships an undesired item or the wrong size and color of the item purchased. Time is consumed in the event of returning products that were wrongly purchased and this could lead to the cancellation or delay of an event.
The security of the customers may also be at risk due to increased possibilities of fraud activities as the customer does not examine the product being purchased physically (Laudon ; Guercio 2001).E-tailers are taking extra caution to curb these glitches so as to be able to increase their sales, attract and maintain their customers. However, security bleaches are still a big problem that customers face and the e-tailers have still not yet devised mechanisms that will totally protect their customers against such mishaps. Identity theft poses great loss to the customers when their names, addresses and secret codes to their essential documents such as credit cards are stolen by online hackers who have greatly increased.
Businesses enlisted on the internet have resulted to encourage computer security by purchasing programs that will protect their networks and the personal details of their customers for example anti-virus softwares and firewalls. Phishing is another example of security bleach that customers fear as it leads to fraud activities. Fraudsters imitate the characteristics of reputable companies to attract customers who end up providing them with their private information, such cases are not viewed as merchants mistakes therefore money or property stolen is not refundable. Merchants have resulted to use of quality seals that act as an identification mark for their companies to prevent customers from being fooled by fraudsters.
The privacy of the customer at times is neglected by the merchants when they retrieve their contact address from the encoded information on the credit cards they use when purchasing products without their knowledge. Customers are forced to pay extra money for the purchases they make as shipping fee also contains a voluntary extra fee for shipping insurance to protect the purchased goods from theft and damage. Customers who lack extra money to pay the shipping fee face a risk of losing their goods or receiving damaged goods. Other methods used by fraudsters to gain access to private information provided by customers is use of pop-ups and pop-unders, adware and spyware, email scams and spam, viruses, worms, rootkits and trojan (Laudon ; Guercio 2001).
Customers who suffer mostly from this demise are those who are not particulate to details, shop in a hurry, do not have sufficient information pertaining the organizations, new online shoppers, those who have little or none information technology knowledge and women as they shop more often than men and very few women use the fraud detection tools available to them unlike men who make sure the companies are not a hoax. To avoid being victims of this perplexing predicament customers are advised to look for companies that offer direct, fast and secure delivery for the purchased products. To ensure the products they purchase are not stolen, lost or damaged during delivery and in case such instance happen the customer will be liable to full compensation of the money spent or replacement of the same purchased products. Customers should purchase their products from companies that they are sure offer quality services and have implemented mechanisms that protect their security.
In case of doubt they should do thorough research to familiarize themselves with the company’s policies and culture. They can also rely on information given by consumers who have purchased their products from those companies or by logging into comparison sites like Bizrate where they can read consumer comments about the quality of the services provided by those companies. Talking to the company representative portrays a better opportunity for the customer to learn more about the company because his queries will be directly answered and the customer will be in a better position to order for the provision of the company’s catalog. The websites for trustworthy companies contain seals that show their approval as reliable companies and the seals should directly link to them once accessed.
The customers should also take time to analyze the shipping services the company provides by looking at the courier company they use and their shipping charges to know if they offer tracking mechanisms and insurance cover to the purchased products (Goel, 2007).Fraudsters use tricks to get useful information from the customers, to avoid being misdirected the customer should not attempt to give more information about themselves that are not a necessity in facilitating delivery of purchased products like social security number, secret codes, bank account numbers and filling information on check boxes. Before giving out the required details to initiate the process of purchase the customers should ensure the web site is secured. This is indicated by presence of a locked padlock at the bottom right hand corner of the site and the web address begins with https to indicate it is a valid address.
The customers should monitor their account regularly to be able to detect any unauthorized use and report the incident to prevent being victims of fraud activities. It is also important for the customer to take the initiative to learn ways that will help them avoid identity fraud incidents (Khosrowpour, 2006).Impact of Identity Theft on IndustryVictims of identity fraud lose a lot of money and purchased products to fraudsters greatly affecting their financial stability. Most of them are not even able to recover or get compensation of their stolen money or purchased products.
Those who are lucky to get compensation do not recover back the full amount of money that was stolen or the full amount of money they used to purchase the stolen products as only few get the full compensation. Most of the reported cases are not investigated because internet fraud crime has increased as the financial fraud departments receive very many cases. The victims lack evidence that would help them claim their compensation from the credit card companies as the financial fraud department refuses to issue them the police report claiming they are not liable to have it. The victim ends up wasting a lot of time and more money trying to follow up on their reports and their rights to receive their compensation.
This leaves the victims helpless and emotionally scared resulting to withdrawal from purchasing products through online shopping. Some reduce their frequency of relying on online shopping to do their purchases while others reduce the total amount of money they spend on online shopping (Khosrowpour, 2006).Identity fraud has negatively affected the e-commerce industry as the total sales made by the merchants have drastically reduced due to the withdrawal of fraud victims, for instance in the year 2008 the merchants lost approximately USD21 billion (Inga, Dobler & Schenk, 2000). The popularity of companies enlisted on the internet has reduced as fraud victims post their negative comments and dissatisfaction surveys to the disposal of everyone.
E-tailers have been forced to use more money to make sure their companies meet the required standards of providing maximum security to the information given by customers and to the products they have purchased. Government agencies have taken the initiative of running campaigns and programs that will enlighten the customers on the dangers of online shopping and mechanism of curbing them. They should also advice the victims of this mishap on the essential steps to take while reporting the incidence and claiming their compensations. Acts that protect both the customers and the merchants of online shopping have been drafted and endorsed by the president for example the Identity Theft and Assumption Deterrence Act (18USC 1028) that was implemented in 1998.
Programs that help fraud victims to report their incidents have also been formed for example identity theft 911 (Hall, 2003).Current Security ProtocolsThe nosedived sales that the merchants are suffering from have made them to device mechanisms that will enable the customers to trust their services and remain loyal to them. They have undertaken measures that heighten the security of their websites and any information received from the customers. They also avail information to their customers to enlighten them on the protective measures they have undertaken to be able to recovery the lost sales by attracting more potential customers and maintaining them.
Most of them use security mode system to protect the information provided by the customers. The browser of the customers automatically switches to secure mode once the customer gains access to the websites of those companies and when keying in their information. This encrypts the data that the customers have provided protecting it from being available to potential fraudsters. The merchants also purchase logos that will enable the customers to know they have taken security measures to protect them from fraud activities.
The agencies that authorize the merchants to use those logos checks the company to ensure it has undertaken the right procedures in ensuring they have maximum security from fraudsters (Christianson, Harbison & Roe, 1999). For example the presence of locked padlocks or key icons at the bottom right hand corner of the web sites indicates that the companies have taken the initiative of protecting the security of their customers and potential customers should not be afraid to engage themselves in the services provided by the companies to do their shopping. The merchants are relying on web browsers that support the initiative of protecting the customers from fraud activities such as Internet Explorer and Netscape which also provide the facility of offering security mode to web pages. These web browser warn the customers when they are about to send their information to insecure sites that may have been modified by fraudsters to trick the customers (Christianson, Harbison & Roe, 1999).
Programs that ensure customers safety from security breaches is obtained and maintained are being used by the merchants or customers when purchasing products. Such programs protect the information provided by the customers preventing fraudsters from attaining them for example Secure Socket Layer (SSL) and Secure Electronic Transaction (SET) which is mainly used by credit card companies, introduction of “cyber dollars’ that enable customers to undertake purchasing activities without revealing their identity or credit card details as they buy electronic purchasing power that is encrypted and has unique features that are used to detect the viability of those coins and tokens (Christianson, Harbison ; Roe, 1999). The merchants of those companies enlisted on the internet have adopted using the card signature code retrieved from a current credit card billing address thus the customer needs not provide information pertaining to his credit card or bank account. Most of the companies that provide online shopping services have taken the measure of not keeping the personal information provided by the customers once the purchase process is over to prevent fraudsters from accessing the information when they manage to hack into their systems.
This explains why the customers have to login their personal information ever time they want to place a purchase order. They also advice their customers to ensure they log off completely from internet browsers by closing them down after they finish using them to erase the temporary cookies from the sites they have visited especially if they are using a common personal computer (Campbell ; Woodley, 2003).The merchants have resulted to use of mechanisms that will boost the security of their websites so as to win the trust of their customers and expand the scope of their market. They have resulted to patching up and updating their websites with the latest version of the web browser they are using, this prevents the entry of bugs into their system availing access to malware.
They also advocate for creation of passwords that are difficult to guess or recycle which are accompanied by a pass phrase which will enable the customer to remember the complex password. The security of the password is also enhanced by use of security signature files that authorizes only the owner of the signature to gain access to the information stored. Also browsers that have inbuilt pop-up and pop-unders blockers, Ad-Aware and Spybot S;D and Anti Virus Software to remove the viruses, worms, rootkit and trojans that affect the website preventing access to them are being used by the merchants to fight this predicament that is attacking their businesses (Christianson, Harbison ; Roe, 1999).Future Security TechniquesResearch is been done to find more techniques that can be used to improve the services provided by Information and technology such as e-commerce industry.
The technology is facing criticism as cases of security breaches are on the rise due to the technological advancement. People are debating if to continue shopping online or to stop the practice completely as it is affecting their financial stability. Some of the security enhancement techniques that are being advocated for are the use of biometric identification methods and formulation of advanced encryption methods. Criminal investigators use biometric features to link their suspects to crimes committed such as DNA and fingerprints.
Researchers are trying to use the same principle to try and devise biometric techniques that can be used to curb online fraud, for instance use of the customers and the merchants voice, fingerprints or iris to gain access to the personal information provided by the customer. They are also trying to find ways of making credit and debit cards that have more complex encryption characteristics to prevent fraudsters from hacking information on the cards for their personal gains (Campbell ; Woodley, 2003).ConclusionAbout 26% of online shoppers have stopped relying on online transaction system, 21% have reduced their frequency of online shopping and 23% are now using small amounts of money to do their purchases online. This has adversely affected the transaction business as more online banks and e-tailers are losing customers for instance in 2008 43% of customers stopped using the services provided by online banks and e-tailers missed approximately USD21 billion from customer withdrawal.
About 81% of customers were fraud victims mostly constituting women who are the frequent customers of e-tailers (Inga, Dobler ; Schenk, 2000).To curb this demise, customers should be more careful when engaging in online services to purchase their products. They should ensure they have enough evidence that shows they can trust the company enlisted on the internet to do their shopping, they should also use the information displayed on comparison sites such as Bizrate which will enable them to learn more about the welfare and functions of those companies before they send their personal information to them. They should also not ignore the basic information about identity theft provided to them as the information will help them in the future to detect instances where identity theft can take place.
The government should hold campaigns that will educate the public about the dangers of online shopping and how to curb them. They should formulate more policies that will be beneficial to both the customer and the merchants in terms of security protection. Also money should be set aside to help in running research programs that will help in the development of better ways of curbing internet fraud. More fatal consequences that fraudsters face when they are caught should be implemented to act as a warning to the other upcoming fraudsters.
Also the financial fraud department should be well equipped with resources that will help them to tackle all the cases forwarded to them regarding fraud activities. With these facts in check on line shopping will be the most efficient and reliable method of shopping.;;;;;;Word Count: 3640Reference ListCampbell, D. ; Woodley, S.
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