Security and legal problems associated with e-commerce

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A complete development of e-commerce has been slowed down in a remarkable way by two kinds of problems: the ones concerning security and the legal ones. In this essay, a brief overview of both of them will be given, trying to understand what is still an obstacle for a sound growth of e-commerce, what threats are really seriously harming it and what can be done to overcome them successfully.

1. Is e-commerce unsafe?

The element that has represented the biggest problem until now for the development of e-commerce is security. Referring to it, the most relevant issues to arise concern:

* Fraud threats: since the customer cannot physically see the product, there is no warranty that what is bought actually corresponds to what is shown in the website. Moreover, e-commerce safety is put at risk by the misuse of the buyer’s confidential information that the seller can do. This especially concerns the data used for payment, such as the credit card number

* Encryption issues: connected to the last issue presented, the safety of the transaction is threatened by the potential access that someone can have to confidential information the buyer sends when filling the forms necessary for the payment.

Both issues are quite significant and it’s actually not that simple gaining the consumer’s confidence on something so impersonal, virtual and that looks potentially dangerous. However, there are means that increase the safety of e-commerce and give the customer valid means to be protected.

Surely, better information about the ways the transaction can be carried out safely, the security of the payment, the encryption instruments applied and the rights of the customer would increase dramatically the confidence of the buyer, would decrease the cases of frauds and, therefore, would make the buyers more responsible and safe.

As for the fraud risk, the customer can rely on certain quality marks and labels that guarantee that the seller follows good practices and its operations do not violate customers’ rights and keep the confidentiality of their information. Firms adopting fair practices and protecting buyer’s personal data are cooperating to guarantee to the customer their reliability and to make him/her feel confident about the firm’s operations. In order to do this, some organizations are certifying the soundness of the practices while others just group all the firms that agreed on applying certain procedures. An example of the former is Trust-E (www.truste.com), which supervises companies’ operations and allows them to show an easily recognizable logo on their website. Better Business Bureau Online Programme (www.bbonline.org) bunches 20000 companies that share common practices on e-commerce and that are committed to fulfil their obligations in this field.

As for the encryption risk, several software are now available in order to guarantee that the data transmitted in the transaction will not be accessible by anybody not involved in the transaction itself. The use of security software can be detected in various ways: displaying the icon of a locked padlock at the bottom of the screen, changing the http:// in the beginning of the URL into https:// and using the technologies SSL and SET. The former stands for Security Socket Layer and encrypts the credit card information sent via internet. The latter is the acronym for Secure Electronic Transaction and privacy and confidentiality are guaranteed through a combination of digital certificates and digital signatures among the purchaser, a merchant and the purchaser’s bank.

If we add to this framework of effective means, the rights that the customer has in case of wrong charges amount or, more simply, of dissatisfaction concerning the purchase, e-commerce safety seems to be an issue that can be easily faced and that mostly needs an increased information to the customers.

2. What legal issues are still open?

As for legal issues concerning e-commerce, the main arguments concern:

* Privacy

* Terms, conditions, warranties and liabilities

* Use of electronic signatures and contracts

Websites gather a great amount of information about the customer, since every purchase requires, at least, personal and credit card data to be submitted and, therefore, to be delivered in the company’s hands. Moreover, the firm knows the customer’s preferences and the pages that have been visited. In order to protect his/her privacy, the buyer can read the privacy policy of the firm and, in case it belongs to any independent organization that monitors data treatment, can also know more in detail the general practices of the organization.

Terms and conditions of the purchase are displayed just before the item is bought and it is needed for the customer to agree with them in order to complete the buy successfully. Everything needs to be clarified before the order is submitted, especially referring to specific conditions such as warranties and liabilities.

As for the use of electronic signatures and contracts, from 2000 they are as legal and enforceable as traditional paper contracts. Even if the law states the equality of electronic signatures and normal signatures, no specification about the technology to be used is presented. Because of this, many categories of electronic signatures, offering insecure methods and easy to be intercepted, are provided and are considered legal, although they offer little security and they can be used for fraudulent purpose. A way to secure digital signatures encompasses a technology called Public Key Infrastructure, which encrypts online documents using an algorithm and allows them to be accessible only to authorized parties.

3. What next?

Without any doubt, in these years many step forwards have been done in order to increase the appeal of the e-commerce, to make the customers more confident when using it and to increase the guarantees on security and legal coverage.

The next steps on this way include a better understanding on the buyer’s side of the brands, label and logos that can endorse security, privacy and fair practices by the companies involved. Once a complete trust will be achieved, the boosting effect on e-commerce is likely to be stunning and its applications even more widespread than now.

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