Skip to main content

Consumer and Seller Protection in EC

When buyer and seller cannot see each other, chances are high that dishonest people will commit all types of fraud and other crimes over the internet. During the first few years of electronic commerce, one witnessed many of these, ranging from the creation of a virtual bank that disappeared together with the investor's deposits to manipulating stocks on the Internet.

Fraud on the Internet 

Internet fraud and its sophistication have grown as much as and even faster than the Internet itself. Some of them are as below: 
1) Online Auction Fraud: The majority of complaints registered at the National consumers League deals with auctions. Money is collected but goods are not satisfactory, or even not delivered. 

2) Internet Stock Fraud: The Securities and Exchange Commission (SEC) bought charges against 44 companies and individuals who illegally promoted stocks on computer bulletin boards, online newsletters and investment websites. In Most cases, stock motors falsely spread positive rumors about the prospects of the companies they touted. In other cases, the information provided might have been true, but the promoters did not disclose that they were paid to talk up the companies. Stock promoters specifically target small investors who are lured to the promise of fast profit.

For example, in November 1996, a federal judge agreed to freeze the assets of the chairman of a little company, called SEXI (Systems of Excellence) and the proprietors of an Internet electronic newsletter, called SGA Goldstar. The latter illegally received SEXI stocks in exchange for promoting the stock to unwary investors. As a result, SEXI stock jumped from 15 to 285, at which time the proprietors dumped the shares. Cases like this, as well as ones involving non-registered securities, are likely to increase because of the popularity of the Internet. 

Different Ways for Protection against Fraud in E-Commerce 

There are several ways buyers can be better protected against fraud in e-commerce.




Consumer Protection in E-Commerce 

Consumer protection is critical to the success of any commerce, especially electronic, where buyers do not see sellers. Some tips for safe electronic shopping are shown below:

1) Look for reliable brand names at sites like Wal-Mart Online, Disney Online, and Amazon.com. Before purchasing, make sure that the site is authentic by entering the site directly and not from an unverified link. 

2) Search any unfamiliar selling site for the company's address and phone and fax numbers. Call-up and quiz the employees about the seller. 

3) Check-out the vendor with the local Chamber of Commerce or Better Business Bureau (bbboline.org). Look for seals of authenticity such as TRUSTE. 

4) Investigate how secure the seller's site is by examining the security procedures, and by reading the posted privacy policy. 

5) Examine the money-back guarantees, warranties, and service agreements. 

6) Compare prices to those in regular stores. Too-low prices could prove too good to be true, and some "catch" is probably involved.

7) Ask friends what they know. Find testimonials and endorsements in community sites and well-known bulletin boards. 

8) Find-out what your rights are in case of a dispute. Consult consumer protection agencies and the National Fraud Information Center (fraud.org). 

9) Check consumerworld.org for a listing of useful resources. 

10) Check cfenet.com and isaca.org.


Seller Protection in E-Commerce 

The Internet makes fraud by customers or others easier because of the ease of anonymity. Sellers must be protected against: 
  1. Customers who deny that they placed an order. 
  2. Customers who download copyrighted software and/or knowledge and sell it to others. 
  3. Customers who give false payment (credit card or bad checks) information in payment for products and services provided. 
  4. Use of their name by others (e.g., imposter sellers). 
  5. Use of their unique words and phrases, names and slogans and their web addresses by others (trademark protection). 
Sellers who have access to the database can use this information to decide whether to proceed with a sale. 

Other possible solutions include the following: 
  1. Use intelligent software to identify possibly questionable customers (or do this identification manually in small companies). One technique, e.g., involves comparing credit card billing and requested shipping addresses. 
  2. Identify warning signals for possibly fraudulent transactions. 
  3. Ask customers whose billing address is different from the shipping address to call their bank, and have the alternate address added to their bank account. Retailers agree to ship the goods to the alternate address only if this is done.




Labels:

Comments

Post a Comment

Popular Post

Advantages of EDI

1) Shortened Ordering Time : Paper orders have to be printed, enveloped and sent out by the customer's post room, passed through the postal service, received by the supplier's post room and input to the supplier's order pocessing system. To achieve all this, reliably, in under three days would be to do very well. EDI orders are sent straight into the network and the only delay is how often the supplier retrieves messages from the system. Orders can be in the supplier's system within a day, or if there is urgency, the messages can be retrieved more frequently, for example every hour.  2) Cost Cutting : The use of EDI can cut costs. These include the costs of stationery and postage but these will probably be fully matched by the costs of running the EDI service. The principle saving from the use of the EDI is the potential to save staff costs. For example, if the orders are directly input to the system there is no need for an order entry clerk.  3) Elimination of Errors :...
Post a Comment
Read more

Infrastructure for EC

Introduction The e-commerce infrastructure is defined here as the supporting capabilities for online trading between multiple companies which include hardware, software, networks, online payment technologies, security and encryption technologies, online trading business models, legal and regulatory framework, and managerial and organisation capabilities.  Infrastructure is the shared human, informational , and technical resources on which the work system relies in order to operate, even though these resources exist and are managed outside of the work system.  To evaluate the interdisciplinary aspects of construction e-commerce infrastructure, one proposes using a four pillar approach. Figure 5.1 illustrates the skeleton for the proposed integrated construction e-commerce infrastructure. The proposed integrated e-business infrastructure can be broken down into the following four groups of components:  1) Technological Infrastructure : Technology infrastructure is a work...
1 comment
Read more

Business Strategy - E-Commerce Strategy Inputs

E-Commerce Strategy Inputs Traditionally an IT strategy would be subservient to the business strategy. For e- commerce the IT strategy becomes a central component (or the determinant factor) in business strategy.  Inputs to an e-commerce business strategy are: Technology An E-commerce technology includes:  EDI : Streamline supply logistics and facilitate decreases in trade cycle times.  Electronic Markets : Re-define the operation of a market sector.  Internet E-Commerce : Provides new direct sales opportunities and novel business to business and business to consumer applications.  Internet e-commerce can be used to improve, transform and re-define business value:  Organisation  Source of Business value  i) Improve it a) Product promotion b)New direct sales channel c)Direct saving d)Time to market e)Customer service f)Brand image  ii)Transform it a)Technological and organizational learning b)Customer relations  iii)Re-define it a)New pro...
Post a Comment
Read more