Trust in Electronic Commerce

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Trust in Electronic Commerce
An Ethical Challenge in Computing
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Trust in Electronic Commerce

• Presentation is based on material from the paper
  
• Factors that Promote Trust in Electronic
  Commerce A Work in Progress Report By J. Barrie
  Thompson, Andrew Storey, and Caron Green, 11th
  Australasian Conference on Information Systems
  ACIS2000, 6-8 December 2000, Brisbane.
• Proceedings and Abstracts published by Queensland
  University of Technology ISBN 1 86435 512 3

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Trust in Electronic Commerce

• Content
• 1. Some General Comments on Electronic Commerce
• 2. Views of Trust in Electronic Commerce
• 3. An Assessment of Trust within electronic
  Commerce

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Trust in Electronic Commerce
Some General Comments on Electronic Commerce

• Electronic commerce is changing the way business
  is being carried out.
• Within traditional business situations trust
  frequently comes from face to face contact with
  the people who front the organisations.
• But in the interactive world of Electronic
  Commerce the establishment of trust in dealing
  with people and companies on the Internet takes
  on a different perspective.

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Trust in Electronic Commerce
Some General Comments on Electronic Commerce

• The goal for organisations in the field of
  electronic commerce should be that they are
  compliant with established 'Standard Business
  Practice', paying regard to ethical and trust
  issues which can be audited by commercial
  accountants.
• However, many customers need to determine how to
  evaluate electronic commerce information. They
  want to be able to identify businesses that are
  trustworthy and understand mechanisms of privacy
  before they divulge personal and financial
  details.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• In considering trust in Electronic Commerce two
  differing viewpoints can be identified
• customer orientated, and
• organisational orientated.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• The Customer Orientated View
• Ratnasingham believes that
• Trust increases the amount of information sharing
  between trading partners thus enabling
  relationships to develop between businesses and
  customers.
• In the faceless online-commercial world
  participants need assurance that risks are
  reduced to an acceptable level.
• Such assurance could involve
• objective third parties looking after the
  interests of consumers using authenticated seals
  on web sites and
• trusted digital certification with web sites
  subscribing to and adhering to a code of
  operating principles.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Operating principles are likely to include the
  distinct elements 
• (i) Business Practice Disclosures Disclosing
  company information and stating business
  practices for online electronic commerce.
•  (ii) Transaction Integrity The entities that
  are designed to maintain effective controls over
  customer orders to ensure they are billed and
  delivered as agreed.
•  (iii) Information Protection Ensures that
  private customer information is protected, from
  uses unrelated to the business transactions with
  which they have undertaken with a particular
  Electronic Commerce company.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• The Organisational Orientated View
• McCullagh considers that trust relating to
  electronic commerce has 4 major components
• Technology Trust
• Behavioural Trust
• Product Trust
• Legal Trust

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Technology Trust
• Establishing trust in technology would be likely
  to involve assessment and understanding of
  computer systems and the security mechanisms
  present. This may result in trusting the outcome
  created by the process.
• Technology trust involves the use of fundamental
  Trusted Computing Security Evaluation Criteria,
  which as identified by McCullagh has six
  requirements
• (i) Security Policy
• There must be a well-defined and explicit
  security policy, which is enforced by the system.
• (ii) Marking
• Labelled access control, which must be associated
  with objects.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Requirements (continued)
• (iii) Identification
• Identification of individual users must be
  specific.
• (iv) Accountability
• A reliable system able to trace actions affecting
  security to responsible parties, incorporating
  selectively kept audit information that is
  protected.
• (v) Assurance
• Hardware and software mechanisms contained in
  computer systems that enforce the security
  requirements must have enough assurance and be
  capable of being independently evaluated.
• (vi) Continuous Protection
• Continuous protection of trusted mechanisms must
  be in place to prevent tampering such as
  unauthorised changes.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Behavioural Trust
• Different types of societies have different
  attitudes to trust.
• This is likely to affect electronic commerce in
  several ways through legislative mechanisms,
  statutory bodies or third parties, and
  enforcement functions that assure that
  information is accurate, true, and complete.
• Information about the performance of an
  electronic commerce company and its ownership may
  effect the establishment of trust in different
  societies. For example,
• trust in state owned organisations might be
  higher in China than in Italy or France, and
• high trust may be placed in well-established
  multinationals in the USA, UK or Japan. But they
  may not be as trusted in China, France or Italy
  where a strong familistic (high trust only inside
  family) culture exists.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Product Trust 
• Here trust is dependent on goodwill in relation
  to brand loyalty where the consumer trusts the
  name/brand of the product and establishes an
  emotional trust-bond with that company or its
  products.
• For example, in the bricks and mortar world
• Heinz Baked Beans
• Campbells Soup
• Carrs Biscuits
• Marks and Spencer
• Harrods

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Product Trust 
• Here trust is dependent on goodwill in relation
  to brand loyalty where the consumer trusts the
  name/brand of the product and establishes an
  emotional trust-bond with that company or its
  products.
• For example, in the bricks and mortar world
• Heinz Baked Beans
• Campbells Soup
• Carrs Biscuits
• Marks and Spencer
• Harrods
• Where a brand establishes good positive qualities
  it is positively trusted, although consumer trust
  can soon be lost if the brand is tarnished by,
  for example, negative publicity.

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Trust in Electronic Commerce
2. Views of Trust in Electronic Commerce

• Legal Trust 
• It is unlikely that there will be a sufficient
  amount of trust established in electronic
  commerce without an adequate legal framework.
• The problem with global electronic commerce is
  the enactment of legislation that provides
  assurance.
• But assurance through legislation will always be
  questionable and what is likely to happen is a
  balance of established trust and enacted
  legislation.
• Such enacted legislation will need to be designed
  so that it will encourage people to take
  advantage of electronic commerce both
  domestically and globally. However, it is
  unlikely that there will be legal conformity
  across the globe on any one issue.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• To successfully establish trust in electronic
  commerce a hierarchy of Certification
  Authorities/Trusted Third Parties is a key
  element and must be established in the online
  electronic commerce environment.
• However, the electronic commerce consumer may
  find it difficult to rely on a third party, as
  they may not be in a position to make a feasible
  assessment due to a lack of appropriate
  knowledge. A better understanding of the area can
  be obtained by consideration of trust with regard
  to
• Types,
• Barriers, and difficulties relating to
  development, and
• Trust promoting mechanisms.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• Three Types of Trust identified by Ratnasingham
  are
• (i) Deterrence Based Trust
• This deals with the threat of punishment, which
  could be a stronger motivator than promises of
  reward. It is not entirely based on punishment
  but on the rewards gained from not violating
  trust. An example of this is the preservation of
  trading reputation, which has been built up, by
  trading partners behaving in a trustworthy
  manner.
• (ii) Knowledge Based Trust
• A type of trust linked to how much is known about
  a trading partner. The trustor is able to
  understand and predict the behaviour of the other
  trading partner (the trustee). This is likely to
  be derived over time as a trading relationship
  develops and the reliability of behaviour can be
  predicted.
• (iii) Identification Based Trust
• Based on common values, this type of trust
  involves common tasks not on individual
  intimations from trading partners. This is likely
  to be in the form of standard processes developed
  over time and where one party takes on the needs
  and desires of others as policy, which would also
  include joint gains for both parties.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• Three Major Barriers and Difficulties Relating to
  the Development of Trust in Electronic Commerce
  according to Ratnasingham are
• (i) The virtual and global context of Electronic
  Commerce hinders trust from developing.
• (ii) Technology alone is not enough. "Virtuality"
  requires trust to make it work.
• (iii) It is very difficult to observe and measure
  trust.
•  These are very apparent difficulties which are
  most prevalent where
• there is no prior familiarity,
• no shared past experience or
• no expectation of a common future.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• There are also other concerns relating to trust
  support components that need to be considered
• How well the security mechanisms and resulting
  trust components work?
• How long will these environments remain secure?
• Trust is essentially a human element and the
  mechanisms supporting it are only as good as the
  way they are designed and used.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• Trust Promoting Mechanisms for Electronic
  Commerce
• In their position statement in 1998 on Electronic
  Commerce the Council of European Professional
  Informatics Societies (CEPIS, have some poignant
  things to say about trust
• They give validity to the term trust stating that
  it is an essential part of electronic commerce
  networks and that the way information is handled
  at both ends is essential to the enhancement of
  trust.
• In many cases if the benefits outweigh the risk
  people will accept limited trust.
• However, non-experts who want to deal with
  trusted networks, but are not willing or able to
  do detailed checks, would find it important to
  have a high degree of trust present.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• CEPIS further state
• That the public has a common lack of
  understanding of Electronic Commerce and
  therefore finds it difficult to distinguish
  between the hype and the truth. This situation
  may lead to restriction in public/customer
  acceptance.
• Trust enhancers need to be incorporated into new
  models for electronic business. These will act as
  confidence builders for participants in
  electronic commerce.
• It is important to recognise the differences
  between traditional and electronic models for
  business and the new mechanisms, which can be
  used to promote trust in the latter.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• To operate an electronic commerce business there
  needs to be in place a business infrastructure
  that people understand and trust.
• Trust enhancing mechanisms have been identified
  as
• Traceability,
• Technical Mechanisms,
• Identification,
• Authentication,
• Access Control,
• Protection,
• Confidentiality and
• Integrity.
• These are all tangible components. However, Meyer
  has made clear that much of what participants in
  electronic commerce will have to believe in,
  count on, and use cannot always be seen.

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Trust in Electronic Commerce
3. An Assessment Of Trust Within Electronic
Commerce

• Mayer further argues that
• Trust will be with the company not the Internet
  itself.
• Trust will be earned by giving good products and
  services.
• Established traditional companies taking on an
  electronic commerce format should be able to
  build on existing trust through reputation.
• Others may need to join organisations that audit
  companies and then award them Seals of Approval
  to increase the trust new customers may need
  before deciding to do business with them.

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Trust in Electronic Commerce
4. Conclusions

• The unique nature of the Internet often requires
  it to have special rules, and for many purposes
  these can be developed from existing conventional
  business rules.
• The measurement of trust is never likely to be an
  easily defined science and Internet commerce has
  too much momentum now to fail through lack of
  trust.
• However, conditions of business online would be
  greatly enhanced by the existence of workable
  trust orientated protocols that have ethics and
  professionalism at their core.
•  Trust online has more than one facet as many
  will trust in the name of a well-known respected
  company and trust may develop in those companies
  displaying an assurance or trust seal.

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Trust in Electronic Commerce
4. Conclusions

• Any organisation using its web site to gain and
  maintain a profitable business presence on the
  Internet must have high quality security software
  and user trusted transaction mechanism.
• The aim should be to replace the chaos of todays
  Internet with an environment that allows secure
  communications and transactions.
• This should include ways of easily checking the
  trustworthiness of web sites and the companies
  behind them.
• Consumer concerns are likely to dominate as more
  electronic commerce is conducted from home based
  interaction mechanism such as digital televisions
  and Internet telephones.

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Trust in Electronic Commerce
4. Conclusions

• Further commercial trust is likely to grow as
  many organisations behind trusted professions
  offer trust authentication services amalgamate
  and become known and trusted world-wide.
• However, the major companies in this sector may
  dominate and push up the cost of these trust
  audit services, so that many smaller companies
  may not be able to use such services without
  passing substantial costs onto the consumer.
• There is no simple answer as the world of
  Internet commerce is not accurately predictable.
  There is always likely to be a trust versus risk
  factor as there is in all business dealings on
  the Internet or otherwise.

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Trust in Electronic Commerce
4. Conclusions

• It would be fallacy to presume that in the future
  all businesses involved in electronic commerce
  are going to be trust-worthy.
• However, the perception of trust in electronic
  commerce transactions can change for the better
  if the technology supporting security, privacy
  and delivery of service is quality driven.
• Trust is not an ethical concept in itself,
  although it can be greatly enhanced by the
  involvement of professional people and companies
  adopting a socially responsible and ethical
  approach.