Page 334 - Introduction to Electronic Commerce and Social Commerce

10.7 Consumer and Seller Protection from Online Fraud 321

• Ask the customer to disclose the credit card verification code.
• Imposters—sellers using the name of another seller • Delay shipment until money is received.
(see the CyberSource Annual Reports).
• Other sellers using the original seller’s names, trade- For further discussion of what merchants can do to protect
marks, and other unique features, and even their themselves from fraud, see CyberSource. For ten measures
Web addresses (or similar to it). to reduce credit card fraud for Internet Merchants (a
• Payment fraud by consumers and by criminals. FraudLabs.com White Paper), see fraudlabs.com/docs/
fraudlabs_white_paper.pdf.

Sellers also can be attacked illegally or unethically by
competitors. Protecting Marketplaces and Social
Network Services
Example
Marketplaces such as eBay, Yahoo!, Amazon.com, and
A class action lawsuit was filed against McAfee in the United
States District Court for the Northern District of California Alibaba face a problem of sellers that try to sell counterfeit
products online. The problem is especially acute for Alibaba
(Case No. 10-1455-HRL) alleging that after the plaintiffs
purchased McAfee software from McAfee’s website, a whose business model is to connect sellers and buyers (in
contrast with Amazon.com) that mostly buys products and
deceptive pop-up ad (from one of McAfee’s partners) that
looks like a McAfee page appeared, and thanked the plain- retails them to consumers. Marketplaces try to crack down
on the counterfeiter, but it is not an easy job.
tiffs for their software purchase. The pop-up ad asked them
to click on a “Try it Now” button, which they assumed would Facebook and other social networks that move to com-
mercialization are facing the problem of fake accounts. For
download the software they had just purchased, but unbe-
knownst to them, they received a 30-day trial subscription to the problem and solutions, see Jones (2016).
Arpu, Inc. (a non-McAfee product). They found out later that
McAfee transmits customer credit/debit card and billing Protecting Both Buyers and Sellers: Using
information to Arpu (customers are charged $4.95 per month Electronic Signatures and Other Security
after the trial period) and collects an undisclosed fee for each Features
customer who “tries” Arpu via the McAfee website. See also
courthousenews.com/2010/04/08/McAfee.pdf. One method to help distinguish between legitimate and fraud-
ulent transactions is electronic signatures.
What Can Sellers Do? An electronic signature is “the electronic equivalent of a
handwritten signature” (per pcmag.com/encyclopedia/term/
Companies like Chargeback Stopper (chargebackstopper. 42500/electronic-signature). Electronic signatures provide
com) and Chargeback Protection (chargebackprotection.org) high level of security and are recognized by most legal entities
provide merchants with a database of credit card numbers that as being equivalent to handwritten signatures. All electronic
have had “chargeback orders” recorded against them. Sellers signatures are represented digitally. Signed electronic docu-
who have access to the database can use this information to ments and contracts are as legally binding as paper-based doc-
decide whether to proceed with a sale. In the future, the credit uments and contracts.
card industry is planning to use biometrics to manage elec-
tronic shoplifting. In addition, sellers can use PKI and digital Authentication
certificates, especially the SET protocol, to help prevent fraud.
Other possible solutions include the following: In the online environment where consumers and merchants
do not have physical contact with one another, proving the
• Use intelligent software to identify questionable custom- authenticity of each person is necessary since buyers and
ers (or in small companies, do this identification manu- sellers do not see each other. However, if one can be sure of
ally). One technique, for example, involves comparing the identity of the person on the other end of the line, there
credit card billing and requested shipping addresses. could be more e-commerce applications. For example, stu-
• Identify warning signals—i.e., red flags—for possible dents would be able to take exams online from anywhere
fraudulent transactions. without the need for proctors. Fraud among recipients of
• Ask customers whose billing address is different from the government payments would be minimized. Buyers would
shipping address to call their bank and have the alternate be assured who the sellers are, and sellers would know, with
address added to their bank account. Retailers will agree to a very high degree of confidence, who the buyers really are.
ship the goods to the alternate address only if this is done. Online job interviews would be accurate because it would be