Bennett Gold LLP Earns Mention In Toronto Life Magazine, April 2005.

Eeek! Commerce: Internet Security

What exactly is e-commerce? Simply stated, e-commerce is an exchange of information using any electronic medium. For consumers, examples of e-commerce using familiar technology include placing a telephone order for pizza or faxing your flight preferences to your travel agent. Today, personal computer and Internet technologies allow us to exchange more information, faster, more efficiently than ever before. So, for instance, banks can instantly respond to our requests for transferring funds or paying-off credit cards. But, by availing ourselves of these technologies, do we expose ourselves to security risks? Let's consider the issue of security by posing three fundamental questions:

1) Do we need to think about security when conducting business over the Internet?

Projections for consumer-to-business e-commerce show growth from the 1996 level of US $289 million to US $26 billion by 2000. During the same period, the percent of Internet users who make on-line purchases is expected to grow from 23% to 43%. Also consider that Cyber Dialogue's latest survey revealed that 95% of those shopping on-line were either satisfied or very satisfied with their shopping experience. These developments suggest that the value placed on electronically exchanged information will increase. And with that increase, there will be those who could abuse your personal information.

Consider that the e-consumer can enter into a transaction with a vendor located anywhere in the world. By eliminating intermediaries, the consumer may not know where the vendor is located, its reputation or its integrity. Finally, when conducting transactions over the Internet, consumers leave a "data trail" of personal history and buying preferences that may be recorded and distributed without any prior notification to the consumer.

2) What's being done to improve e-commerce security?

Cryptographic applications have been developed to help secure transactions and identify parties, thus preventing participants from modifying the details of completed transactions. Unfortunately, most rules developed for commerce are based on paper transactions and have not caught up with computer-age technology. Currently the SET (Secure Electronic Transactions) initiative by VISA and MasterCard is poised to be the leader for Internet credit card users.

3) Who can provide e-commerce assurance?

Assurance takes many forms but the key is "trust". A number of initiatives exist on the Internet. TRUSTe asks its subscribers to post specific privacy policies. BBB Online is a "pay -as-you-play" service for business joining the online organization. The Online Privacy Alliance is a new group of 50 Internet related businesses that was formed in response to the US government's call for self-regulation by industry on the Internet.

However, the most effective assurance service on the Internet today is WebTrust. This program was created by the professional accounting bodies in North America and launched in September 1997. The rational behind CAs and CPAs assuring e-commerce sites on the Internet is simple: They are the same folks who certify the financial information of companies whose securities trade publicly.

The user-friendly WebTrust seal of approval is earned by an e- business that meets strict criteria. A business seeking the WebTrust certification must: 1) disclose its online business practices; 2) maintain effective controls to ensure transaction integrity; and 3) maintain effective controls to protect personal and private information. And the WebTrust seal must be updated at least every three months, or it disappears from the e-commerce web site. As the consumer side of e-commerce continues to grow exponentially fears will be waylaid. However, without a system of trust in place that growth will be hindered in these early years of the new economy.

Bennett Gold LLP invites your questions, comments and feedback: E-Mail: action@BennettGold.ca Telephone: 416-449-2249. Read Bennett Gold LLP's Privacy Policies and Practices.

WEBTRUST is a trade mark of the Canadian Institute of Chartered Accountants. All other cited trade names and marks are property of their respective owners.

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