the challenges of online trust
TRANSCRIPT
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The Challenges of Online Trust
For online and offline business
Alex Todd, President, Trust Enabling Strategies
McMaster World Congress 2005
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Why do we still not trust the Internet?
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Internet Trends
100
125
150
175
200
2001 2002 2003 2004
Year
Gro
wth
UsersUsageE-commerceTrust
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http://24.232.151.11/visa.com/verified-by.visa.com/Register_Online_Visa_ID=hidden_Online_Session_ID_994839483948394959485743298754329875432987543298754398743230004384754732876/
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Discovery Identity Value of goods/services Vendor reliability Rules of engagement Credit worthiness Authorization to commit
Fulfillment Customer services Shipper reliability Transfer of responsibility Quality control Applicable standards Tariffs & customs
Negotiation & Order Product fit Negotiation criteria Cultural issues Quality assurance Viability of seller Applicable exchange rate Order placement and
verification
Settlement & Compliance Governing laws Agreement Payment method Non-compliance protection Disputes Recourse Transaction reversal
Privacy considerations
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How do some online businesses manage to inspire so much confidence with consumers?
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VS.
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
2. Experiential Sources Feedback Forum Tradenable escrow Product authentication
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
3. Ability Industry practices
(SSL, etc.)
2. Experiential Sources Feedback Forum Tradenable escrow Product authentication
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
3. Ability Industry practices
(SSL, etc.)
2. Experiential Sources Feedback Forum Tradenable escrow Product authentication
4. Motivation Policies (comprehensive) SafeHarbor investigations Disallowed products SquareTrade dispute
resolution VeRO notice of IP
infringement
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
5. Trust Management Identify reliable providers of
feedback
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
3. Ability Industry practices
(SSL, etc.)
2. Experiential Sources Feedback Forum Tradenable escrow Product authentication
4. Motivation Policies (comprehensive) SafeHarbor investigations Disallowed products SquareTrade dispute
resolution VeRO notice of IP
infringement
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eBay Builds ConfidenceTrust Ensuring ServicesTrust Establishing Services
5. Trust Management Identify reliable providers of
feedback
1. Authoritative Sources ID Verify from Equifax Product Opinions & Grading Product Appraisals Privacy Policy TRUSTe seal
3. Ability Industry practices
(SSL, etc.)
6. Risk Transfer User Agreement Fraud Protection Insurance PayPal Buyer Protection
2. Experiential Sources Feedback Forum Tradenable escrow Product authentication
4. Motivation Policies (comprehensive) SafeHarbor investigations Disallowed products SquareTrade dispute
resolution VeRO notice of IP
infringement
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How do other online businesses compare?
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Is trust different offline?
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OECD Privacy Principles
4. Motivation Accountability
3. Ability Data quality Security safeguards
2. Experiential Sources Openness Individual participation
1. Authoritative Sources Purpose specification
5. Trust Management
Trust Establishing Services
6. Risk Transfer Use limitation Collection limitation
Trust Ensuring Services
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How can we apply the same Trust Enabling™ principles to an offline confidence problem?
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Recommendations for Restoring Confidence in Capital Markets
Trust Ensuring ServicesTrust Ensuring Services
4. Motivation4. Motivation Honesty of leadersHonesty of leaders
Independence of roles and policingIndependence of roles and policing
Motivators/interestsMotivators/interests
Ethics/values/spirit/cultureEthics/values/spirit/culture
Personal accountabilityPersonal accountability
Recourse/enforcementRecourse/enforcement
Industry Rules & RegulationsIndustry Rules & Regulations
Oversight & Standards BodiesOversight & Standards Bodies
Government’s rollGovernment’s roll
3. Ability3. Ability Awareness of financial systemsAwareness of financial systems
Standardized stock rating systemsStandardized stock rating systems
Internet technologiesInternet technologies
Trust Establishing ServicesTrust Establishing Services
2. Experiential Sources2. Experiential Sources Participation of stakeholdersParticipation of stakeholders
Relying party representationRelying party representation
Tone of leadersTone of leaders
Tough decision making by leadersTough decision making by leaders
Information distributionInformation distribution
Performance benchmarkingPerformance benchmarking
Metrics tracking and reporting Metrics tracking and reporting
Systems for financial transparencySystems for financial transparency
1. Authoritative Sources1. Authoritative Sources Independent Boards of DirectorsIndependent Boards of Directors
Encouragement of candorEncouragement of candor
Certification by CEO & CFOCertification by CEO & CFO
Independent AuditorsIndependent Auditors
Unbiased third party analystsUnbiased third party analysts
Global industry-specific accounting standardsGlobal industry-specific accounting standards
Board quality ratingsBoard quality ratings
Machine/human understandabilityMachine/human understandability
5. Trust Management5. Trust Management 6. Risk Transfer6. Risk TransferStakeholder liabilityStakeholder liability
Guarantees/warranties on quality of securitiesGuarantees/warranties on quality of securities
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Sarbanes-Oxley Legislation
4. Motivation4. Motivation Sec 1 - Public Company Accounting Oversight Board Sec 1 - Public Company Accounting Oversight Board
Sec 2 - Auditor IndependenceSec 2 - Auditor Independence
Sec 6 - Commission Resources and AuthoritySec 6 - Commission Resources and Authority
Sec 8 - Corporate and Criminal Fraud AccountabilitySec 8 - Corporate and Criminal Fraud Accountability
Sec 9 - White Collar Crime Penalty EnhancementsSec 9 - White Collar Crime Penalty Enhancements
Sec 11 - Corporate Fraud and AccountabilitySec 11 - Corporate Fraud and Accountability
Auditor Conflict of InterestAuditor Conflict of Interest
Sec 402 - Enhanced Conflict of Interest ProvisionsSec 402 - Enhanced Conflict of Interest Provisions
Code of Ethics for Senior Financial OfficersCode of Ethics for Senior Financial Officers
Sec 5 - Analyst Conflicts of InterestSec 5 - Analyst Conflicts of Interest
Sec 3 - Corporate ResponsibilitySec 3 - Corporate Responsibility
3. Ability3. Ability Tampering of a Record of Otherwise Impeding and Tampering of a Record of Otherwise Impeding and
Official ProceedingOfficial Proceeding
2. Experiential Sources2. Experiential Sources Inspections of Registered Public Accounting Inspections of Registered Public Accounting
FirmsFirms
1. Authoritative Sources1. Authoritative Sources Sec 4 - Enhanced Financial DisclosureSec 4 - Enhanced Financial Disclosure
Sec 7 - Studies and ReportsSec 7 - Studies and Reports
Sec 10 - Corporate Tax ReturnsSec 10 - Corporate Tax Returns
Accounting StandardsAccounting Standards
Auditor Reports to Audit CommitteeAuditor Reports to Audit Committee
Qualifications of Associated Persons of Brokers Qualifications of Associated Persons of Brokers and Dealersand Dealers
Sec 302 – Certification of Financial Statements Sec 302 – Certification of Financial Statements and Internal Controls by CFOand Internal Controls by CFO
5. Trust Management5. Trust Management 6. Risk Transfer6. Risk Transfer
Trust Establishing ServicesTrust Establishing Services Trust Ensuring ServicesTrust Ensuring Services
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How can you apply the same Trust Enabling™ principles to improve the effectiveness of your
or any other business environment?
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Trust Research
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PANEL SLIDES
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PIPEDA Privacy Principles
Motivation Accountability Challenging Compliance
Ability Accuracy Safeguards
Experiential Sources Individual Access Consent
Authoritative Sources Openness Identifying Purpose
Trust Management
Trust Establishing Services
Risk Transfer Limiting Collection
Trust Ensuring Services
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Discovery Identity Value of goods/services Vendor reliability Rules of engagement Credit worthiness Authorization to commit
Fulfillment Customer services Shipper reliability Transfer of responsibility Quality control Applicable standards Tariffs & customs
Negotiation & Order Product fit Negotiation criteria Cultural issues Quality assurance Viability of seller Applicable exchange rate Order placement and
verification
Settlement & Compliance Governing laws Agreement Payment method Non-compliance protection Disputes Recourse Transaction reversal
Privacy considerations
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Discovery Identity Value of goods/services Vendor reliability Rules of engagement Credit worthiness Authorization to commit
Fulfillment Customer services Shipper reliability Transfer of responsibility Quality control Applicable standards Tariffs & customs
Negotiation & Order Product fit Negotiation criteria Cultural issues Quality assurance Viability of seller Applicable exchange rate Order placement and
verification
Settlement & Compliance Governing laws Agreement Payment method Non-compliance protection Disputes Recourse Transaction reversal
Covered by Canadian Code of Practice for Consumer Protection in E-commerce
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Canadian E-Commerce Principles for Consumer Protection
Motivation Online Privacy Complaint Handling and
Dispute Resolution Identification & Policies
Experiential Sources Unsolicited E-mail Objective claims can be substantiated Calculate total charges Provide record of transaction
Trust Management Online method for verifying its
certification or membership
Trust Establishing Services
Risk Transfer Contract Formation Guarantees & Warrantees Cancellation, Exchange & Return Correction Liability
Trust Ensuring Services
Authoritative Sources Information Provision Language Communications with Children
Ability Security of Payment & Personal
Information