SCHOOL OF MANAGEMENT STUDIES

SEMINA PUNJABI UNIVERSITY

PATIALA
R PRIVACY ISSUE IN E MAREKTING
REPORT

SUBMITTED TO :- SUBMITTED BY :-
PROF. SATINDER KARANVIR KALRA
KUMAR
5830
MBA-II(B)4TH SEM
 E-Marketing

E-marketing means using digital technologies to help sell your goods or services. These technologies,
like e-mail and websites, are a valuable complement to traditional marketing methods whatever the size
of your company or your business model..

Benefits of e marketing:-

GLOBAL REACH
If you build a website you can reach anyone, anywhere in the world, provided they have internet access.
This allows you to tap new markets and compete globally with only a small investment. This can be
particularly useful for niche providers, companies whose products can be posted easily, or businesses
who are looking to expand geographically but cannot afford to invest in new offices
or businesses.

LOWER COST
A properly planned and effectively targeted e-marketing campaign can reach the right customers at a
much lower cost than traditional marketing methods. You can build a website for as little as a few
hundred pounds or send e-mail for a fraction of a penny.

TRACKABLE, MEASURABLE RESULTS

Marketing by e-mail or banner advertising makes it easier to establish how effective your campaign has
been. If someone clicks on a banner advert, or a link in an e-mail or on a website, you can see how they
arrived at your website. This detailed information about customers’ responses to your advertising allows
you to assess the effectiveness of different campaigns.

24-HOUR MARKETING
With a website your customers can find out about your products even if your office is closed.

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SHORTER LEAD TIMES
If you have a website or an e-mail template, you can react to events much more quickly – giving your
marketing a much more contemporary feel. If one of your products is in the news or something
important happens in your industry, you can capitalise on it without having to print or post anything.

A LEVEL PLAYING FIELD

With a well-designed website, you can show yourself to be as professional and credible as your larger
competitors.

PERSONALISATION
If your customer database is linked to your website, then whenever someone visits the site, you can greet
them with targeted offers. The more they buy from you, the more you can refine your customer profile
and market effectively to them. A great example of this is Amazon’s website which
suggests products based on your and other people’s previous purchases.

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 Marketing Ethics:-

Ethics has been termed the study and philosophy of human conduct, with an emphasis on the
determination of right and wrong. For marketers, ethics in the workplace refers to rules (standards,
principles) governing the conduct of organizational members and the consequences of marketing
decisions. Therefore, ethical marketing from a normative perspective approach is defined as “practices
that emphasize transparent, trustworthy, and responsible personal and organizational marketing policies
and actions that exhibit integrity as well as fairness to consumers and other stakeholders. Marketing
ethics focuses on principles and standards that define acceptable marketing conduct, as determined by
various stakeholders and the organization responsible for marketing activities. While many of the basic
principles have been codified as laws and regulations to require marketers to conform to society’s
expectations of conduct, marketing ethics goes beyond legal and regulatory issues. Ethical marketing
practices and principles are core building blocks in establishing trust, which help build long-term
marketing relationships. In addition, the boundary-spanning nature of marketing (i.e. sales, advertising,
and distribution) presents many of the ethical issues faced in business today.

Both marketing practitioners and marketing professors approach ethics from different
perspectives. For example, one perspective is that ethics is about being a moral individual and that
personal values and moral philosophies are the key to ethical decisions in marketing. Virtues such as
honesty, fairness, responsibility, and citizenship are assumed to be values that can guide complex
marketing decisions in the context of an organization. On the other hand, approaching ethics from an
organizational perspective assumes that establishing organizational values, codes, and training is
necessary to provide consistent and shared approaches to making ethical decisions.

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 Need for Private Data:-

Why is privacy of concern to e-commerce?

There are many business opportunities in the changing technical environment. The use of digital systems
allows data capture at a much larger rate and scope than previously; e-commerce sites could potentially
collect an immense amount of data about personal preferences, shopping patterns, patterns of
information search and use, and the like about consumers, especially if aggregated across sites. Not only
is it easier than ever to collect the data, it is also much easier to search these data. New computational
techniques allow data mining for buying patterns and other personal trends. These data can be used to
personalize a customer’s e-commerce experience, augment an organization’s customer support, or
improve a customer’s specific e-site experience. The data are valuable for reuse, for example, in finding
potential sales to existing customers. As well, the data are also valuable to aggregators (who may look
for other personal trends and patterns) or for other types of resale. Indeed, reuse and resale are
simultaneously both potential opportunities and problems

Information security: -

protecting information and information systems from unauthorized access, use, disclosure, disruption,
modification, perusal, inspection, recording or destruction.

The terms information security, computer security and information assurance are frequently incorrectly
used interchangeably. These fields are interrelated often and share the common goals of protecting the
confidentiality, integrity and availability of information; however, there are some subtle differences
between them.

These differences lie primarily in the approach to the subject, the methodologies used, and the areas of
concentration. Information security is concerned with the confidentiality, integrity and availability of
data regardless of the form the data may take: electronic, print, or other forms.

Computer security can focus on ensuring the availability and correct operation of a computer system
without concern for the information stored or processed by the computer. Governments, military,

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corporations, financial institutions, hospitals, and private businesses amass a great deal of confidential
information about their employees, customers, products, research, and financial status. Most of this
information is now collected, processed and stored on electronic computers and transmitted across
networks to other computers. Should confidential information about a business' customers or finances or
new product line fall into the hands of a competitor, such a breach of security could lead to lost business,
law suits or even bankruptcy of the business. Protecting confidential information is a business
requirement, and in many cases also an ethical and legal requirement. For the individual, information
security has a significant effect on privacy, which is viewed very differently in different cultures

Type of information can be misused

1. Personal information.
2. Demographic information.
3. Contact information.
4. Credit card no./ac no
5. Taste and preferences.

Security classification for information

An important aspect of information security and risk management is recognizing the value of
information and defining appropriate procedures and protection requirements for the information. Not
all information is equal and so not all information requires the same degree of protection. This requires
information to be assigned a security classification.

The first step in information classification is to identify a member of senior management as the owner of
the particular information to be classified. Next, develop a classification policy. The policy should
describe the different classification labels, define the criteria for information to be assigned a particular
label, and list the required security controls for each classification.

Some factors that influence which classification information should be assigned include how much
value that information has to the organization, how old the information is and whether or not the
information has become obsolete. Laws and other regulatory requirements are also important
considerations when classifying information.

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The type of information security classification labels selected and used will depend on the nature of the
organisation, with examples being:

 In the business sector, labels such as: Public, Sensitive, Private, Confidential.
 In the government sector, labels such as: Unclassified, Sensitive But Unclassified, Restricted,
Confidential, Secret, Top Secret and their non-English equivalents.
 In cross-sectoral formations, the Traffic Light Protocol, which consists of: White, Green, Amber
and Red.

All employees in the organization, as well as business partners, must be trained on the classification
schema and understand the required security controls and handling procedures for each classification.
The classification a particular information asset has been assigned should be reviewed periodically to
ensure the classification is still appropriate for the information and to ensure the security controls
required by the classification are in place.

Access control

Access to protected information must be restricted to people who are authorized to access the
information. The computer programs, and in many cases the computers that process the information,
must also be authorized. This requires that mechanisms be in place to control the access to protected
information. The sophistication of the access control mechanisms should be in parity with the value of
the information being protected - the more sensitive or valuable the information the stronger the control
mechanisms need to be. The foundation on which access control mechanisms are built start with
identification and authentication.

Identification is an assertion of who someone is or what something is. If a person makes the statement
"Hello, my name is John Doe" they are making a claim of who they are. However, their claim may or
may not be true. Before John Doe can be granted access to protected information it will be necessary to
verify that the person claiming to be John Doe really is John Doe.

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Authentication

It is the act of verifying a claim of identity. When John Doe goes into a bank to make a withdrawal, he
tells the bank teller he is John Doe (a claim of identity). The bank teller asks to see a photo ID, so he
hands the teller his driver's license. The bank teller checks the license to make sure it has John Doe
printed on it and compares the photograph on the license against the person claiming to be John Doe. If
the photo and name match the person, then the teller has authenticated that John Doe is who he claimed
to be.

There are three different types of information that can be used for authentication: something you know,
something you have, or something you are. Examples of something you know include such things as a
PIN, a password, or your mother's maiden name. Examples of something you have include a driver's
license or a magnetic swipe card. Something you are refers to biometrics. Examples of biometrics
include palm prints, finger prints, voice prints and retina (eye) scans. Strong authentication requires
providing information from two of the three different types of authentication information. For example,
something you know plus something you have. This is called two factor authentication.

On computer systems in use today, the Username is the most common form of identification and the
Password is the most common form of authentication. Usernames and passwords have served their
purpose but in our modern world they are no longer adequate. Usernames and passwords are slowly
being replaced with more sophisticated authentication mechanisms.

After a person, program or computer has successfully been identified and authenticated then it must be
determined what informational resources they are permitted to access and what actions they will be
allowed to perform (run, view, create, delete, or change). This is called authorization.

Authorization to access information and other computing services begins with administrative policies
and procedures. The policies prescribe what information and computing services can be accessed, by
whom, and under what conditions. The access control mechanisms are then configured to enforce these
policies.

Different computing systems are equipped with different kinds of access control mechanisms - some
may even offer a choice of different access control mechanisms. The access control mechanism a system

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offers will be based upon one of three approaches to access control or it may be derived from a
combination of the three approaches.

The non-discretionary approach consolidates all access control under a centralized administration. The
access to information and other resources is usually based on the individuals function (role) in the
organization or the tasks the individual must perform. The discretionary approach gives the creator or
owner of the information resource the ability to control access to those resources. In the Mandatory
access control approach, access is granted or denied basing upon the security classification assigned to
the information resource.

Examples of common access control mechanisms in use today include Role-based access control
available in many advanced Database Management Systems, simple file permissions provided in the
UNIX and Windows operating systems, Group Policy Objects provided in Windows network systems,
Kerberos, RADIUS, TACACS, and the simple access lists used in many firewalls and routers.

To be effective, policies and other security controls must be enforceable and upheld. Effective policies
ensure that people are held accountable for their actions. All failed and successful authentication
attempts must be logged, and all access to information must leave some type of audit trail.

Cryptography

Information security uses cryptography to transform usable information into a form that renders it
unusable by anyone other than an authorized user; this process is called encryption. Information that has
been encrypted (rendered unusable) can be transformed back into its original usable form by an
authorized user, who possesses the cryptographic key, through the process of decryption. Cryptography
is used in information security to protect information from unauthorized or accidental disclosure while
the information is in transit (either electronically or physically) and while information is in storage.

Cryptography provides information security with other useful applications as well including improved
authentication methods, message digests, digital signatures, non-repudiation, and encrypted network
communications. Older less secure application such as telnet and ftp are slowly being replaced with

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more secure applications such as ssh that use encrypted network communications. Wireless
communications can be encrypted using protocols such as WPA/WPA2 or the older (and less secure)
WEP. Wired communications (such as ITU-T G.hn) are secured using AES for encryption and X.1035
for authentication and key exchange. Software applications such as GnuPG or PGP can be used to
encrypt data files and Email.

Cryptography can introduce security problems when it is not implemented correctly. Cryptographic
solutions need to be implemented using industry accepted solutions that have undergone rigorous peer
review by independent experts in cryptography. The length and strength of the encryption key is also an
important consideration. A key that is weak or too short will produce weak encryption. The keys used
for encryption and decryption must be protected with the same degree of rigor as any other confidential
information. They must be protected from unauthorized disclosure and destruction and they must be
available when needed. PKI solutions address many of the problems that surround key management.

Defense in depth

Information security must protect information throughout the life span of the information, from the
initial creation of the information on through to the final disposal of the information. The information
must be protected while in motion and while at rest. During its life time, information may pass through
many different information processing systems and through many different parts of information

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processing systems. There are many different ways the information and information systems can be
threatened. To fully protect the information during its lifetime, each component of the information
processing system must have its own protection mechanisms. The building up, layering on and
overlapping of security measures is called defense in depth. The strength of any system is no greater
than its weakest link. Using a defense in depth strategy, should one defensive measure fail there are
other defensive measures in place that continue to provide protection.

Security vulnerabilities in electronic commerce

1. There are many points of failure, or vulnerabilities, in an e-commerce environment. Even in a
simplified e-commerce scenario – a single user contacts a single web site, and then gives his
credit card and address information for shipping a purchase – many potential security
vulnerabilities exist. Indeed, even in this simple scenario, there are a number of systems and
networks involved. Each has security issues: A user must use a web site and at some point
identify, or authenticate, himself to the site. Typically, authentication begins on the user’s home
computer and its browser. Unfortunately, security problems in home computers offer hackers
other ways to steal ecommerce data and identification data from users. Some current examples
include a popular home-banking system that stores a user’s account number in a Web “cookie”
which hostile web-sites can crack, ineffective encryption or lack of encryption for home wireless
networks and, mail-borne viruses that can steal the user's financial data from the local disk or
even from the user's keystrokes. While these specific security problems will be fixed by some
software developers and web-site administrators, similar problems will continue to occur.
Alternatives to the home computer include Point-of- Sale (POS) terminals in brick-and-mortar
stores, as well as a variety of mobile and handheld devices.

2. The user’s web browser connects to the merchant front-end. When a consumer makes an online
purchase, the merchant's web-server usually caches the order's personal information in an archive
of recent orders. This archive contains everything necessary for credit-card fraud. Further, such
archives often hold 90 days' worth of customers' orders. Naturally, hackers break into insecure
web servers to harvest these archives of credit card numbers. Several recent thefts netted
100,000, 300,000, and 3.7 million credit-card data, respectively. accordingly, an e-commerce

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 merchant's first security priority should be to keep the web servers' archives of recent orders
behind the firewall, not on the front-end web servers Furthermore, sensitive servers should be
kept highly specialized, by turning off and removing all inessential services and applications
(e.g., ftp, email). Other practical suggestions to secure web servers can be found in, and among
many others.

3. The merchant back-end and database. A site’s servers can weaken the company's internal
network. This not easily remedied, because the web servers need administrative connections to
the internal network, but web server software tends to have buggy security. Here, the cost of
failure is very high, with potential theft of customers’ identities or corporate data. Additionally,
the back-end may connect with third party fulfillment centers and other processing agents.
Arguably, the risk of stolen product is the merchant's least-important security concern, because
most merchants' traditional operations already have careful controls to track payments and
deliveries. However, these third parties can release valuable data through their own
vulnerabilities.

Social networking sites and privacy

Social networking sites have become very popular within the last five years. With the creation of
Facebook and the continued popularity of MySpace many people are giving their personal information
out on the internet. These social networks keep track of all interactions used on their sites and save them
for later use.[14] Most users are not aware that they can modify the privacy settings and unless they
modify them, their information is open to the public. On Facebook privacy settings can be accessed via
the drop down menu under account in the top right corner. There users can change who can view their
profile and what information can be displayed on their profile. In most cases profiles are open to either
"all my network and friends" or "all of my friends." Also, information that shows on a user's profile such
as birthday, religious views, and relationship status can be removed via the privacy settings. If a user is
under 13 years old they are not able to make a Facebook or a MySpace account, however, this is not
regulated.

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Facebook Case:-
November 2007. Facebook got into hot water regarding its new beacon advertisements which displayed
items that your friends bought on third-party partner sites. While the data usage may have been legal
(Facebook offered options for opt out and had written provisions permitting these actions in its privacy
policy), the public response overwhelmingly was one of betrayed trust, condemnation; forcing a public
apology.

Wiki leak case:- Hackers rushed to the defense of WikiLeaks on Wednesday, launching a new attack on
Visa after shutting down MasterCard, Swedish prosecutors, a Swiss bank and others who have acted
against the site and jailed founder Julian Assange.

Internet "hacktivists" operating under the label "Operation Payback" claimed in a Twitter message, "we
are attacking www.visa.com in an hour! Get your weapons ready and stay tuned," NBC News reported.

Privacy Policy:-
A privacy policy is a legal document that discloses some or all of the ways a party gathers, uses,
discloses and manages a customer's data. The exact contents of a privacy policy will depend upon the
applicable law and may need to address the requirements of multiple countries or jurisdictions. While
there is no universal guidance for the content of specific privacy policies, a number of organizations
provide example forms or online wizards.

Privacy Policy Of Google:-

Privacy Policy

This Privacy Policy applies to all of the products, services and websites offered by Google Inc. or its
subsidiaries or affiliated companies except Postini (Postini Privacy Policy). Sometimes, we may post
product specific privacy notices or Help Center materials to explain our products in more detail.

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If you have any questions about this Privacy Policy, please feel free to contact us through our website or
write to us at

Privacy Matters
c/o Google Inc.
1600 Amphitheatre Parkway
Mountain View, California, 94043
USA

Information we collect and how we use it

We may collect the following types of information:

 Information you provide – When you sign up for a Google Account, we ask you for personal
information. We may combine the information you submit under your account with information
from other Google services or third parties in order to provide you with a better experience and
to improve the quality of our services. For certain services, we may give you the opportunity to
opt out of combining such information. You can use the Google Dashboard to learn more about
the information associated with your Account. If you are using Google services in conjunction
with your Google Apps Account, Google provides such services in conjunction with or on behalf
of your domain administrator. Your administrator will have access to your account information
including your email. Consult your domain administrator’s privacy policy for more information.
 Cookies – When you visit Google, we send one or more cookies to your computer or other
device. We use cookies to improve the quality of our service, including for storing user
preferences, improving search results and ad selection, and tracking user trends, such as how
people search. Google also uses cookies in its advertising services to help advertisers and
publishers serve and manage ads across the web and on Google services.
 Log information – When you access Google services via a browser, application or other client
our servers automatically record certain information. These server logs may include information
such as your web request, your interaction with a service, Internet Protocol address, browser
type, browser language, the date and time of your request and one or more cookies that may
uniquely identify your browser or your account.

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  User communications – When you send email or other communications to Google, we may
retain those communications in order to process your inquiries, respond to your requests and
improve our services. When you send and receive SMS messages to or from one of our services
that provides SMS functionality, we may collect and maintain information associated with those
messages, such as the phone number, the wireless carrier associated with the phone number, the
content of the message, and the date and time of the transaction. We may use your email address
to communicate with you about our services.
 Affiliated Google Services on other sites – We offer some of our services on or through other
web sites. Personal information that you provide to those sites may be sent to Google in order to
deliver the service. We process such information under this Privacy Policy.
 Third Party Applications – Google may make available third party applications, such as
gadgets or extensions, through its services. The information collected by Google when you
enable a third party application is processed under this Privacy Policy. Information collected by
the third party application provider is governed by their privacy policies.
 Location data – Google offers location-enabled services, such as Google Maps and Latitude. If
you use those services, Google may receive information about your actual location (such as GPS
signals sent by a mobile device) or information that can be used to approximate a location (such
as a cell ID).
 Unique application number – Certain services, such as Google Toolbar, include a unique
application number that is not associated with your account or you. This number and information
about your installation (e.g., operating system type, version number) may be sent to Google
when you install or uninstall that service or when that service periodically contacts our servers
(for example, to request automatic updates to the software).
 Other sites – This Privacy Policy applies to Google services only. We do not exercise control
over the sites displayed as search results, sites that include Google applications, products or
services, or links from within our various services. These other sites may place their own cookies
or other files on your computer, collect data or solicit personal information from you.

In addition to the above, we may use the information we collect to:

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  Provide, maintain, protect, and improve our services (including advertising services) and develop
new services; and
 Protect the rights or property of Google or our users.

If we use this information in a manner different than the purpose for which it was collected, then we will
ask for your consent prior to such use.

Google processes personal information on our servers in the United States of America and in other
countries. In some cases, we process personal information outside your own country.

Choices

You can use the Google Dashboard to review and control the information stored in your Google
Account.

Most browsers are initially set up to accept cookies, but you can reset your browser to refuse all cookies
or to indicate when a cookie is being sent. However, some Google features and services may not
function properly if your cookies are disabled.

Google uses the DoubleClick advertising cookie on AdSense partner sites and certain Google services to
help advertisers and publishers serve and manage ads across the web. You can view and manage your
ads preferences associated with this cookie by accessing the Ads Preferences Manager. In addition, you
may choose to opt out of the DoubleClick cookie at any time by using DoubleClick’s opt-out cookie.

Information sharing

Google only shares personal information with other companies or individuals outside of Google in the
following limited circumstances:

 We have your consent. We require opt-in consent for the sharing of any sensitive personal
information.
 We provide such information to our subsidiaries, affiliated companies or other trusted businesses
or persons for the purpose of processing personal information on our behalf. We require that

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 these parties agree to process such information based on our instructions and in compliance with
this Privacy Policy and any other appropriate confidentiality and security measures.
 We have a good faith belief that access, use, preservation or disclosure of such information is
reasonably necessary to (a) satisfy any applicable law, regulation, legal process or enforceable
governmental request, (b) enforce applicable Terms of Service, including investigation of
potential violations thereof, (c) detect, prevent, or otherwise address fraud, security or technical
issues, or (d) protect against harm to the rights, property or safety of Google, its users or the
public as required or permitted by law.

If Google becomes involved in a merger, acquisition, or any form of sale of some or all of its assets, we
will ensure the confidentiality of any personal information involved in such transactions and provide
notice before personal information is transferred and becomes subject to a different privacy policy.

Information security

We take appropriate security measures to protect against unauthorized access to or unauthorized

alteration, disclosure or destruction of data. These include internal reviews of our data collection,
storage and processing practices and security measures, including appropriate encryption and physical
security measures to guard against unauthorized access to systems where we store personal data.

We restrict access to personal information to Google employees, contractors and agents who need to
know that information in order to process it on our behalf. These individuals are bound by
confidentiality obligations and may be subject to discipline, including termination and criminal
prosecution, if they fail to meet these obligations.

Accessing and updating personal information

When you use Google services, we make good faith efforts to provide you with access to your personal
information and either to correct this data if it is inaccurate or to delete such data at your request if it is
not otherwise required to be retained by law or for legitimate business purposes. We ask individual users
to identify themselves and the information requested to be accessed, corrected or removed before
processing such requests, and we may decline to process requests that are unreasonably repetitive or
systematic, require disproportionate technical effort, jeopardize the privacy of others, or would be

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extremely impractical (for instance, requests concerning information residing on backup tapes), or for
which access is not otherwise required. In any case where we provide information access and correction,
we perform this service free of charge, except if doing so would require a disproportionate effort.
Because of the way we maintain certain services, after you delete your information, residual copies may
take a period of time before they are deleted from our active servers and may remain in our backup
systems. Please review the service Help Centers for more information.

Enforcement

Google adheres to the US Safe Harbor Privacy Principles of Notice, Choice, Onward Transfer, Security,
Data Integrity, Access and Enforcement, and is registered with the U.S. Department of Commerce’s
Safe Harbor Program.

Google regularly reviews its compliance with this Privacy Policy. When we receive formal written
complaints, it is Google’s policy to contact the complaining user regarding his or her concerns. We will
cooperate with the appropriate regulatory authorities, including local data protection authorities, to
resolve any complaints regarding the transfer of personal data that cannot be resolved between Google
and an individual.

Changes to this Privacy Policy

Please note that this Privacy Policy may change from time to time. We will not reduce your rights under
this Privacy Policy without your explicit consent. We will post any Privacy Policy changes on this page
and, if the changes are significant, we will provide a more prominent notice (including, for certain
services, email notification of Privacy Policy changes). We will also keep prior versions of this Privacy
Policy in an archive for your review

Indian law regarding misuse of information:-

Under the Information Technology Act 2000 Chapter IX Sec 43 (b)

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 “ If any person without permission of the owner or any other person who is incharge of a computer,
computer system or computer network,

(b) downloads, copies or extracts any data, computer data base or information from such computer,
computer system or computer network including information or data held or stored in any
removable storage medium;

he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the
person so affected.

Ways To Secure Yourself

Customer Security: Basic Principles

Most ecommerce merchants leave the mechanics to their hosting company or IT staff, but it helps to
understand the basic principles. Any system has to meet four requirements:

 privacy: information must be kept from unauthorized parties.

 integrity: message must not be altered or tampered with.

 authentication: sender and recipient must prove their identities to each other.

 non-repudiation: proof is needed that the message was indeed received.

Digital Signatures and Certificates

Digital signatures meet the need for authentication and integrity. To vastly simplify matters (as
throughout this page), a plain text message is run through a hash function and so given a value: the
message digest. This digest, the hash function and the plain text encrypted with the recipient's public key
is sent to the recipient. The recipient decodes the message with their private key, and runs the message
through the supplied hash function to that the message digest value remains unchanged (message has not
been tampered with). Very often, the message is also time stamped by a third party agency, which
provides non-repudiation.

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What about authentication? How does a customer know that the website receiving sensitive information
is not set up by some other party posing as the e-merchant? They check the digital certificate. This is a
digital document issued by the CA (certification authority: Verisign, Thawte, etc.) that uniquely
identifies the merchant. Digital certificates are sold for emails, e-merchants and web-servers.

Secure Socket Layers

Information sent over the Internet commonly uses the set of rules called TCP/IP (Transmission Control
Protocol / Internet Protocol). The information is broken into packets, numbered sequentially, and an
error control attached. Individual packets are sent by different routes. TCP/IP reassembles them in order
and resubmits any packet showing errors. SSL uses PKI and digital certificates to ensure privacy and
authentication. The procedure is something like this: the client sends a message to the server, which
replies with a digital certificate. Using PKI, server and client negotiate to create session keys, which are
symmetrical secret keys specially created for that particular transmission. Once the session keys are
agreed, communication continues with these session keys and the digital certificates.

PCI, SET, Firewalls and Kerberos

Credit card details can be safely sent with SSL, but once stored on the server they are vulnerable to
outsiders hacking into the server and accompanying network. A PCI (peripheral component
interconnect: hardware) card is often added for protection, therefore, or another approach altogether is
adopted: SET (Secure Electronic Transaction). Developed by Visa and Mastercard, SET uses PKI for
privacy, and digital certificates to authenticate the three parties: merchant, customer and bank. More
importantly, sensitive information is not seen by the merchant, and is not kept on the merchant's server.

Firewalls (software or hardware) protect a server, a network and an individual PC from attack by viruses
and hackers. Equally important is protection from malice or carelessness within the system, and many
companies use the Kerberos protocol, which uses symmetric secret key cryptography to restrict access to
authorized employees.

Transactions

Sensitive information has to be protected through at least three transactions:

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  credit card details supplied by the customer, either to the merchant or payment gateway. Handled
by the server's SSL and the merchant/server's digital certificates.

 credit card details passed to the bank for processing. Handled by the complex security measures
of the payment gateway.

 order and customer details supplied to the merchant, either directly or from the payment
gateway/credit card processing company. Handled by SSL, server security, digital certificates
(and payment gateway sometimes).

Practical Consequences

1. The merchant is always responsible for security of the Internet-connected PC where customer details
are handled. Virus protection and a firewall are the minimum requirement. To be absolutely safe, store
sensitive information and customer details on zip-disks, a physically separate PC or with a commercial
file storage service. Always keep multiple back-ups of essential information, and ensure they are stored
safely off-site.

2. Where customers order by email, information should be encrypted with PGP or similar software. Or
payment should be made by specially encrypted checks and ordering software.

3. Where credit cards are taken online and processed later, it's the merchant's responsibility to check the
security of the hosting company's web server. Use a reputable company and demand detailed replies to
your queries.

4. Where credit cards are taken online and processed in real time, four situations arise:

1. You use a service bureau. Sensitive information is handled entirely by the service bureau, which
is responsible for its security. Other customer and order details are your responsibility as in 3.
above.

2. You possess an ecommerce merchant account but use the digital certificate supplied by the
hosting company. A cheap option acceptable for smallish transactions with SMEs. Check out the
hosting company, and the terms and conditions applying to the digital certificate.

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 3. You possess an ecommerce merchant account and obtain your own digital certificate (costing
some hundreds of dollars). Check out the hosting company, and enter into a dialogue with the
certification authority: they will certainly probe your credentials.

4. You possess a merchant account, and run the business from your own server. You need trained
IT staff to maintain all aspects of security — firewalls, Kerberos, SSL, and a digital certificate
for the server (costing thousands or tens of thousands of dollars).

Security is a vexing, costly and complicated business, but a single lapse can be expensive in lost funds,
records and reputation. Don't wait for disaster to strike, but stay proactive, employing a security expert
where necessary.

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