Chapter 6 Electronic Commerce

Overview for Today Overview of Electronic Commerce E-Commerce Growth & Pitfalls E-Commerce Security We won’t discuss everything in this chapter, be sure to read the rest… –Please ask questions if you have them!

E-Commerce Application Managing traffic flow on Highway 91 near LA, California –Hang tag with chip & transmitter –Prepaid account (much like EZPass) –Toll road varies from $0.50 to $10.00 to manage traffic flow Result: Saves commuters min per day What are ‘hidden abilities’ ??

Overview of E-Commerce When did e-commerce ‘begin’? Clear benefits of E-commerce to: –Consumers? –Sellers? What are some drawbacks?

A Few Turning Points 1995: > USPS; PC > TV 1997: 50% US households have a computer 1999: Data > Voice transmission 2003: 70% S Korean homes have broadband 2003: Mobile Internet > Fixed-line Users 2010: Smartphones > PC sales 2012: Tablets > PC sales

But That’s Not All That Grew… 2001: $50B lost in world-wide shipping fraud 2002: 65% of all FTC complaints derive from on-line auctions 2004: 10M ID theft victims in US –Spend months and $5000+ to fix 2005: Data Theft Costs US Organizations $58B 2012: 12.5M ID theft victims in US –Cost to consumers $21B 2013: 13.1M ID theft victims in US –Cost to consumers $18B

Larger Scope Failures Numerous “.com” failures resulting from: –Lack of strategy / Incorrect business models (Godiva example of online storefront) –Extreme competition & low prices –Lack of investor funding –Inability to attract customers –Inexperienced management

Electronic Payments Traditional cash payments don’t work well –Will cash ever ‘go away’? “Secure” transactions and payments are required… –What does this mean? –How is security achieved? –What three things do we need to know?

Encryption, Part I Single-Key (symmetric encryption) –Encryption & decryption with same key –This works well until … Public/Private Key (PGP) –Uses 2 keys: 1) public key shared with all, 2) private key held by you alone –Keys are complimentary… –But how do you know private key holder is who they say they are? Clipper Chip

Encryption, Part II Digital Certificates –Provided by a Certificate Authority: RSA (division of EMC Corporation), Verisign, –Verifies that a specific public key belongs to a specific individual –Great complement to encryption

Avoiding Fraud Buyers and sellers never meet face to face… Higher chance of fraud & crime –Internet stock fraud, recent cases –Investment firms selling non-existent funds Many victims fall prey to “social engineering” and Phishing scams (spam…) –CNN video: Scams –The “Nigerian Letter” or 419 Scam –PayPal Example –Always Resolve the IP address:

Important Concepts to Know What is Electronic Commerce? Preventing Fraud Security & Authentication

For Next Time… Exam Review on Monday Exam on Wed Start Chapter on Security on Friday