K.E.S.

College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

E-Banking
A.

INTRODUCTION:
E-Banking stands for Electronic Banking! !is means t!at "our #ank allo$s "ou to

see "our account and #asicall" do an"t!ing t!at "ou need to do using an" electronic de%ice& like a cell '!one& or ()A or *a'to'& essentiall" it is +nline internet #anking& "ou can e%en 'a" #ills. talk to "our #ank re'resentati%es!

B.

CHARACTERISTICS
As noted in t!e 'rior section& e-#anking !as uni,ue c!aracteristics t!at

ma" increase an institution-s o%erall risk 'rofile and t!e le%el of risks associated o'erational& $it! traditional and financial ser%ices& risks. 'articularl" uni,ue strategic& e-#anking legal& re'utation !ese

c!aracteristics include. S'eed of tec!nological c!ange& C!anging customer e/'ectations& Increased %isi#ilit" of 'u#licl" accessi#le net$orks (e.g.& t!e Internet)& *ess face-to-face interaction $it! financial institution customers& 0eed to integrate e-#anking $it! t!e institution-s legac" com'uter s"stems& )e'endence on t!ird 'arties for necessar" tec!nical e/'ertise& and (roliferation of t!reats and %ulnera#ilities in 'u#licl" accessi#le net$orks 1anagement s!ould re%ie$ eac! of t!e 'rocesses discussed in t!is section to ada't and e/'and t!e institution-s risk management 'ractices as necessar" to address t!e risks 'osed #" e-#anking acti%ities C.

BOARD AND MANAGEMENT OVERSIGHT

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

!e #oard of directors and senior management are res'onsi#le for de%elo'ing t!e institution-s e-#anking #usiness strateg"& $!ic! s!ould include. !e rationale and strateg" for offering e-#anking ser%ices including informational& transactional& or e-commerce su''ort3 A cost-#enefit anal"sis& risk assessment& and due diligence 'rocess for e%aluating e-#anking 'rocessing alternati%es including t!ird-'art" 'ro%iders3 4oals and e/'ectations t!at management can use to measure t!e e#anking strateg"-s effecti%eness3 and Accounta#ilit" for t!e de%elo'ment and maintenance of risk management 'olicies and controls to manage e-#anking risks and for t!e audit of e-#anking acti%ities

D. E-BANKING STRATEGY
5inancial institution management s!ould c!oose t!e le%el of e-#anking ser%ices 'ro%ided to %arious customer segments #ased on customer needs and t!e institution-s risk assessment considerations. Institutions s!ould reac! t!is decision t!roug! a #oard-a''ro%ed& e-#anking strateg" t!at considers factors suc! as customer demand& com'etition& e/'ertise& im'lementation e/'ense& maintenance costs& and ca'ital su''ort. Some institutions ma" c!oose not to 'ro%ide e-#anking ser%ices or to limit e-#anking ser%ices to an informational $e#site. 5inancial institutions s!ould 'eriodicall" re-e%aluate t!is decision to ensure it remains a''ro'riate for t!e institution-s o%erall #usiness strateg". Institutions ma" define success in man" $a"s including gro$t! in market s!are& e/'anding customer relations!i's& e/'ense reduction& or ne$ re%enue generation. If t!e financial institution determines t!at a transactional $e#site is a''ro'riate& t!e ne/t decision is t!e range of 'roducts and ser%ices to make a%aila#le electronicall" to its customers. o deli%er t!ose 'roducts and ser%ices& t!e financial institution ma" !a%e more t!an one $e#site or multi'le 'ages $it!in a $e#site for %arious #usiness lines.

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

E. COST-BENEFIT ANALYSIS AND RISK ASESSMENT

5inancial institutions s!ould #ase an" decision to im'lement e-#anking 'roducts and ser%ices on a t!oroug! anal"sis of t!e costs and #enefits associated $it! suc! action. Some of t!e reasons institutions offer e-#anking ser%ices include. *o$er o'erating costs& 4reater geogra'!ic di%ersification Im'ro%ed or sustained com'etiti%e 'osition& Increased customer demand for ser%ices& and 0e$ re%enue o''ortunities. !e indi%iduals conducting t!e cost-#enefit anal"sis s!ould clearl" understand t!e risks associated $it! e-#anking so t!at cost considerations full" incor'orate a''ro'riate risk mitigation controls. 7it!out suc! e/'ertise& t!e cost-#enefit anal"sis $ill most likel" underestimate t!e time and resources needed to 'ro'erl" o%ersee e-#anking acti%ities& 'articularl" t!e le%el of tec!nical e/'ertise needed to 'ro%ide com'etent o%ersig!t of in!ouse or outsourced acti%ities. In addition to t!e o#%ious costs for 'ersonnel& !ard$are& soft$are& and communications& t!e anal"sis s!ould also consider. C!anges to t!e institution-s 'olicies& 'rocedures& and 'ractices3 !e im'act on 'rocessing controls for legac" s"stems3 !e a''ro'riate net$orking arc!itecture& securit" e/'ertise& and

soft$are tools to maintain s"stem a%aila#ilit" and to 'rotect and res'ond to unaut!ori8ed access attem'ts3 !e skilled staff necessar" to su''ort and market e-#anking ser%ices during e/'anded !ours and o%er a $ider geogra'!ic area& including 'ossi#le e/'anded market and cross-#order acti%it"3 !e additional e/'ertise and 1IS needed to o%ersee e-#anking %endors or tec!nolog" ser%ice 'ro%iders3

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

!e !ig!er le%el of legal& com'liance& and audit e/'ertise needed to su''ort tec!nolog"-de'endent ser%ices3 E/'anded 1IS to monitor e-#anking securit"& usage& and 'rofita#ilit" and to measure t!e success of t!e institution-s e-#anking strateg"3 Cost of insurance co%erage for e-#anking acti%ities3 (otential re%enues under different 'ricing scenarios3 (otential losses due to fraud3 and +''ortunit" costs associated $it! allocating ca'ital to e-#anking efforts 5.

MANAGING OUTSOURCING RELATIONSHIPS

!e #oard and senior management must 'ro%ide effecti%e o%ersig!t of

t!ird-'art" %endors 'ro%iding e-#anking ser%ices and su''ort. Effecti%e o%ersig!t re,uires t!at institutions ensure t!e follo$ing 'ractices are in 'lace. Effecti%e due diligence in t!e selection of ne$ ser%ice 'ro%iders t!at considers financial condition& e/'erience& e/'ertise& tec!nological com'ati#ilit"& and customer satisfaction3 7ritten contracts $it! s'ecific 'ro%isions 'rotecting t!e 'ri%ac" and securit" of an institution-s data& t!e institution-s o$ners!i' of t!e data& t!e rig!t to audit securit" and controls& and t!e a#ilit" to monitor t!e ,ualit" of ser%ice& limit t!e institution-s 'otential lia#ilit" for acts of t!e ser%ice 'ro%ider& and terminate t!e contract3 A''ro'riate 'rocesses to monitor %endor-s ongoing 'erformance& ser%ice ,ualit"& securit" controls& financial condition& and contract com'liance3 and 1onitoring re'orts and e/'ectations including incidence res'onse and notification.

4.

INFORMATION SECURITY PROGRAM

E-#anking introduces information securit" risk management c!allenges.

5inancial institution directors and senior management s!ould ensure t!e

K.E.S. College of Arts & Commerce Insurance) a''ro'riate actions.

S.Y.Bcom. (Banking &

information securit" 'rogram addresses t!ese c!allenges and takes t!e Ensure com'liance $it! t!e ;4uidelines Esta#lis!ing Standards for Safeguarding Customer Information< (as issued 'ursuant to section =>2(#) of t!e 4ramm?*eac!?Blile" Act of 2@@@ (4*BA). Ensure t!e institution !as t!e a''ro'riate securit" e/'ertise for its e#anking 'latform. Im'lement securit" controls sufficient to manage t!e uni,ue securit" risks confronting t!e institution. Control considerations include. +ngoing a$areness of attack sources& scenarios& and tec!ni,ues3 A'-to-date e,ui'ment in%entories and net$ork ma's3 Ba'id identification and mitigation of %ulnera#ilities3 0et$ork access controls o%er e/ternal connections3 Cardened s"stems $it! unnecessar" or %ulnera#le ser%ices or files disa#led or remo%ed3 Ase of intrusion detection tools and intrusion res'onse 'rocedures3 (!"sical securit" of all e-#anking com'uter e,ui'ment and media3 and Baseline securit" settings and usage 'olicies for em'lo"ees accessing t!e e-#anking s"stem or communicating $it! customers Ase %erification 'rocedures sufficient to ade,uatel" identif" t!e indi%idual asking to conduct #usiness $it! t!e institution. Ase aut!entication met!ods sufficient to %erif" indi%iduals are

aut!ori8ed to use t!e institution-s s"stems #ased on t!e sensiti%it" of t!e data or connected s"stems. )e%elo' 'olicies for notif"ing customers in t!e e%ent of a securit" #reac! effecting t!eir confidential information. 1onitor and inde'endentl" test t!e effecti%eness of t!e institution-s securit" 'rogram.

C.

ADMINISTRATIVE CONTROLS
E-#anking 'resents ne$ administrati%e control re,uirements and

'otentiall" increases t!e im'ortance of e/isting controls. 1anagement must =

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

e%aluate its administrati%e controls to ma/imi8e t!e a%aila#ilit" and integrit" of e-#anking s"stems. E-#anking information can su''ort identit" t!eft for eit!er fraud at t!e su#Dect institution or for creating fraudulent accounts at ot!er institutions. Institutions s!ould consider t!e ade,uac" of t!e follo$ing controls. Segregation of e-#anking duties to minimi8e t!e o''ortunit" for em'lo"ee fraud3 )ual-control 'rocedures es'eciall" for sensiti%e functions like encr"'tion ke" retrie%al or large on-line transfers3 Beconcilement of e-#anking transactions3 Sus'icious acti%it" re%ie$s and fraud detection $it! targeted re%ie$ of unusuall" large transaction amounts or %olumes3 (eriodic monitoring to detect $e#sites $it! similar names& 'ossi#l" esta#lis!ed for fraudulent 'ur'oses3 Error c!ecks and customer guidance to 're%ent unintentional errors3 Alternate c!annel confirmations to ensure account acti%it" or

maintenance c!anges are 'ro'erl" aut!ori8ed3 and Business disru'tion a%oidance strategies and reco%er" 'lans.

I. BUSINESS CONTINUITY CONTROLS

E-#anking customers often e/'ect 6:-!our a%aila#ilit". Ser%ice interru'tions can significantl" affect customers if t!e institution offers more t!an t!e most #asic ser%ices. 5or e/am'le& customer #ill 'a"ment transactions ma" not #e 'aid on time. )ue to t!e 'otential im'act on customers and customer ser%ice& financial institutions s!ould anal"8e t!e im'act of ser%ice outages and take ste's to decrease t!e 'ro#a#ilit" of outages and minimi8e t!e reco%er" time if one s!ould occur. Some considerations include. Conducting a #usiness im'act anal"sis of e-#anking ser%ices t!at defines t!e minimum le%el of ser%ice re,uired and esta#lis!es reco%er"-time o#Decti%es3 Building redundanc" into critical net$ork com'onents to a%oid single 'oints of failure3 E

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

A'dating #usiness continuit" 'lans to address e-#anking3 )e%elo'ing customer communication 'lans 'rior to an outage3 Be%ie$ing t!e com'ati#ilit" of ke" t!ird 'arties- #usiness continuit" 'lans3 and (eriodicall" testing #usiness resum'tion ca'a#ilities to determine if o#Decti%es can #e met. Based on acti%it" %olumes& num#er of customer effected& and t!e

a%aila#ilit" of alternate ser%ice c!annels (#ranc!es& c!ecks& etc.)& some institutions ma" not consider e-#anking ser%ices as ;mission critical< $arranting a !ig! 'riorit" in its #usiness continuit" 'lan. 1anagement s!ould 'eriodicall" reassess t!is decision to ensure t!e su''orting rationale continues to reflect actual gro$t! and e/'ansion in e-#anking ser%ices.

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

E-Co
A. INTRODUCTION:

!"#!

Electronic commerce (or e-commerce) encom'asses all #usiness conducted #" means of com'uter net$orks. Ad%ances in telecommunications and com'uter tec!nologies in recent "ears !a%e made com'uter net$orks an integral 'art of t!e economic infrastructure. 1ore and more com'anies are facilitating transactions o%er $e#. !ere !as #een tremendous com'etition to target eac! and e%er" com'uter o$ner $!o is connected to t!e 7e#. Alt!oug! #usiness-to-#usiness transactions 'la" an im'ortant 'art in e-commerce market& a s!are of ecommerce re%enues in de%elo'ed countries is generated from #usiness to consumer transactions. E-commerce 'ro%ides multi'le #enefits to t!e consumers in form of a%aila#ilit" of goods at lo$er cost& $ider c!oice and sa%es time. (eo'le can #u" goods $it! a click of mouse #utton $it!out mo%ing out of t!eir !ouse or office. Similarl" online ser%ices suc! as #anking& ticketing (including airlines& #us& rail$a"s)& #ill 'a"ments& !otel #ooking etc. !a%e #een of tremendous #enefit for t!e customers. 1ost e/'erts #elie%e t!at o%erall e-commerce $ill increase e/'onentiall" in coming "ears. Business to #usiness transactions $ill re'resent t!e largest re%enue #ut online retailing $ill also enDo" a drastic gro$t!. +nline #usinesses like financial ser%ices& tra%el& entertainment& and groceries are all likel" to gro$.

B. DEFINITION.
Electronic Commerce means #u"ing and selling of goods and ser%ices across t!e internet. An e commerce site can #e as sim'le as a catalog 'age $it! a '!one no& or it can range all t!e $a" to a real time credit and 'rocessing site $!ere customer can 'urc!ase do$nloada#le goods and recei%e t!em on t!e s'ot. E-Business is t!e creation of ne$& and t!e redesigning of e/isting %alue c!ains and #usiness 'rocesses t!roug! t!e a''lication of information tec!nolog". 0aturall"& e-Business is more t!an e-commerce. It e/'ands t!e sco'e of e-commerce to transform t!e com'an" and t!e industr" itself.

C. BUILDING AN ECOMMERCE SITE INVOLVES THREE STAGES $HICH ARE AS FOLLO$S.

2. C"!a%ing C&'%o i(!) S*o++ing Ca"% :S!o''ing Cart is like a store front $!ere "ou can dis'la" "our 'roducts& catalogue& 'rice etc. !e customer comes to "our store t!roug! $e#site and selects t!e item $!ic! !e re,uires& after selection gets com'leted !e $ill #e s!o$n $it! t!e total amount to #e 'aid for G

K.E.S. College of Arts & Commerce Insurance) com'lete t!e transaction. 6.

S.Y.Bcom. (Banking &

t!e items !e !as selected. Ce $ould #e gi%en an o'tion for 'a"ing t!roug! Credit Card and

A++"oa#*ing Pa, !n% Ga%!-a, S!".i#! P"o.i)!" :0o$ t!e (a"ment 4ate$a" Ser%ice (ro%ider comes into 'icture $!o are aut!ori8ed to acce't credit card on #e!alf of merc!ant. It ma" #e a Bank or Aut!ori8ed Com'an" $!o can acce't and 'rocess credit card online. !e" 'ro%ide us $it! t!e 'a"ment gate$a" soft$are t!at needs to #e integrated $it! t!e $e#site to ena#le secure transaction. !e 'ro%iders are #een certified #" )igital Certified Aut!orities like Herisign& among #u"er and can transact safel". !$ate etc $!ic! #uild trust

9.

In%!g"a%ing Pa, !n% Ga%!-a, -i%* ,o&" $!/'i%! :!is is %er" im'ortant 'art and t!e last stage of com'leting "ou e-'resence.+ur eam at C"#er$e# 4lo#al Ser%ices *td $ill integrate t!e (a"ment 4ate$a" soft$are $it! "our $e#site to carr" online transaction safel" and securel"

D. E-COMMERCE IN INDIA
5or de%elo'ing countries like India& e-commerce offers considera#le o''ortunit". Ecommerce in India is still in nascent stage& #ut e%en t!e most-'essimistic 'roDections indicate a #oom. It is #elie%ed t!at lo$ cost of 'ersonal com'uters& a gro$ing installed #ase for Internet use& and an increasingl" com'etiti%e Internet Ser%ice (ro%ider (IS() market $ill !el' fuel e-commerce gro$t! in Asia-s second most 'o'ulous nation. Amongst t!e Asian nations& t!e gro$t! of e-commerce in India #et$een 2@@F and 6>>9 $as !ig!est in India. Cridit *"onnais forecasts t!at India $ill !a%e 9> million Internet users #" 6>>: and t!at t!e 'otential Internet market $ill reac! :F million !ouse!olds in 6>>=. According to a 1cKinse"-0asscom re'ort #" t!e "ear 6>>G& e-commerce transactions in India are e/'ected to reac! I2>> #illion. Indian middle class of 6GG million 'eo'le is e,ual to t!e entire A.S. consumer #ase. !is makes India a real attracti%e market for e-commerce. o make a successful e-commerce transaction #ot! t!e 'a"ment and deli%er" ser%ices must #e made efficient. !ere !as #een a rise in t!e num#er of com'aniesJ taking u' e-commerce in t!e recent 'ast. 1aDor Indian 'ortal sites !a%e also s!ifted to$ards e-commerce instead of de'ending on ad%ertising re%enue. 1an" sites are no$ selling a di%erse range of 'roducts and ser%ices from flo$ers& greeting cards& and mo%ie tickets to groceries& electronic gadgets& and com'uters. 7it! stock e/c!anges coming online t!e time for true e-commerce in India !as finall" arri%ed. +n t!e negati%e side t!ere are man" c!allenges faced #" e-commerce sites in India. !e relati%el" small credit card 'o'ulation and lack of uniform credit agencies create a

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

%ariet" of 'a"ment c!allenges unkno$n in t!e Anited States and 7estern Euro'e. )eli%er" of goods to consumer #" couriers and 'ostal ser%ices is not %er" relia#le in smaller cities& to$ns and rural areas. Co$e%er& man" Indian Banks !a%e 'ut t!e Internet #anking facilities in 'lace for t!e u' coming e-commerce market. !e s'eed 'ost and courier s"stem !as also im'ro%ed tremendousl" in recent "ears. 1odern com'uter tec!nolog" like secured socket la"er (SS*) !el's to 'rotect against 'a"ment fraud& and to s!are information $it! su''liers and #usiness 'artners. 7it! furt!er im'ro%ement in 'a"ment and deli%er" s"stem it is e/'ected t!at India $ill soon #ecome a maDor 'la"er in t!e e-commerce market. 7!ile man" com'anies& organi8ations& and communities in India are #eginning to take ad%antage of t!e 'otential of e-commerce& critical c!allenges remain to #e o%ercome #efore e-commerce $ould #ecome an asset for common 'eo'le.

E.

THE FUTURE OF E-COMMERCE

7!at does t!e future !old for e-commerceK 1an" $ould sa" it is difficult to 'redict. !e forces t!at determine t!e $e#Js $inners and losers are Dust taking s!a'e and tec!nological ad%ances could add e%en more uncertaint". +n t!e do$nside& some e/'erts 'redict t!at it $ill #e increasingl" difficult for smaller com'anies to esta#lis! t!eir 'resence. (u#lic com'anies and traditional #rand name retailers !a%e dee' 'ockets and a name recognition t!at $ill make it difficult for smaller sites and mom-and-'o' s!o's to attract customers& t!ere#" forcing t!em to com'ete $it! t!e #ig #o"s. +n t!e 0et& itJs one #ig neig!#or!ood. +n t!e u'side& nearl" all e/'erts #elie%e t!at o%erall e-commerce $ill increase e/'onentiall" in coming "ears. Business to #usiness transactions $ill re'resent t!e largest re%enue. +nline retailing $ill also enDo" a drastic gro$t!. Areas e/'ected to go include financial ser%ices& tra%el& entertainment and groceries. And for t!ose considering o'ening a %irtual storefront& fort!coming tec!nolog" and standards agreements $ill make it easier to create a site& to 'rotect it against 'a"ment fraud& and to s!are information $it! su''liers and #usiness 'artners.

F. E-COMMERCE BENEFITS
2>

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

01 In%"o)&#! Ano%*!" C*ann!2 To Ma"k!%

Your #usiness $e# site can take orders 6: !ours a da"& e%er" da" of t!e "ear& and is readil" accessi#le to customers all o%er t!e $orld. A successful #usiness $e# site can 'roduce a !ig!l" 'rofita#le re%enue stream.

31 Lo-!" %*! Co'% o4 O")!" P"o#!''ing

!e direct cost-of-sale for an order taken from a $e# site s!ould #e lo$er t!an t!roug! traditional means (retail& 'a'er #ased)& as t!ere is no !uman interaction during t!e on-line electronic 'urc!ase order 'rocess. Also& electronic selling s!ould %irtuall" eliminate 'rocessing errors& as $ell as #eing faster and more con%enient for t!e %isitor.

51 No P*,'i#a2 S+a#! Li i%a%ion'

You can offer more 'roducts $it! an e-Catalogue& t!an "ou can '!"sicall" stock on s!el%es.

61 B&, an) S!22 7&i#k!"

Be,uirements& #roc!ures& ,uotations& 'urc!ase orders& deli%er" sc!edules& etc.& can #e E-1ailed $it!in seconds to "our su''liers and customers all o%er t!e $orld. 1ails. !e $!ole 'rocess of #u"ing and selling can #e made muc! more efficient and res'onsi%e using E-

81 Boo'% Sa2!' $i%* E9+o"%'

Ase "our $e# site and E-1ail as a lo$ cost $a" of e/tending t!e geogra'!ical reac! of "our #usiness marketing acti%ities& and to de%elo' a glo#al e/'ort market for "our 'roducts and ser%ices.

:1 E9#*ang! an) S*a"! Da%a A#"o'' %*! $o"2)

e/t messages& documents& gra'!ics& '!otogra'!s& music& %ideo& CA)LCA1 files& and muc! more& can #e con%erted into data and sent as E-1ail attac!ments or 'resented on a $e# site. !ere are no 'ostage& 'rinting and 'ackaging costs $it! eCommerce communications. So& use t!is ne$ communicationsJ met!od to $ork ,uicker& and in ne$ $a"s& $it! customers and su''liers outside of "our localit" or countr".

;1 U+)a%! E +2o,!!' In'%an%2, $i%* N!- Po2i#i!' o" P"o#!)&"!'

E-1ail $orks $ell $!en communicating $it! colleagues $!o are off-site& out of t!e countr"& or tele$orking.

<1 Ho2) $!/ M!!%ing' =Da%a Con4!"!n#ing1

22

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

A great $a" to !a%e a %irtual meeting is to u'load a document (s'reads!eets& 'roDect 'lans& etc) on to a $e# site and ena#le it to #e %ie$ed and edited in real-time t!roug! t!e Internet. Colding %irtual meetings can sa%e significantl" on tra%el e/'enses and time.

>1 U'! %*! In%!"n!% %o I +"o.! B&'in!'' A) ini'%"a%ion

7it! a mo#ile J'!one connected to a 'orta#le com'uter& em'lo"ees $orking off-site can access and u'-date internal information& suc! as customer records& 'rice lists& time s!eets& sc!edules& and Do# re'orts. (ro%iding remote Internet access for staff makes it 'ossi#le for t!e latest information to #e at !and& for administrati%e tasks suc! as in%oicing& em'lo"ee $!erea#outs& and e/'ense claims.

0?1

In%"o)&#! Co22a/o"a%i.! $o"king

7it! fast& relia#le& and c!ea' eCommerce communications& it is 'ossi#le for

colleagues& customers& su''liers and 'artners& to use colla#orati%e $orking 'ractices to manage& s!are& and en!ance 'roDect $ork& regardless of location.

G.DISADVANTAGE OF E-COMMERCE
!e Internet is %er" 'u#lic& and man" 'eo'le !esitate to send sensiti%e data o%er t!e $ires $!ere it mig!t #e interce'ted #" nefarious t!ird 'arties. But $it! so man" organi8ations e/cited a#out t!e #enefits of e-commerce& 'lent" of 'eo'le are $orking on resol%ing t!e securit" issues.

26

K.E.S. College of Arts & Commerce Insurance)

S.Y.Bcom. (Banking &

E-F"a&)
A. $HAT IS E-FRAUD@
E-5raud is an um#rella term t!at co%ers numerous acti%ities across t!e Internet t!e common intent of $!ic! is to make mone" or o#tain ser%ices using illegall" or fraudulentl" o#tained information. E-5raud !as a tremendous im'act on t!e Internet Econom"& #ot! in terms of actual dollars stolen from accounts as $ell as lost re%enue due to o%erall decreased confidence in E-Commerce or E-Banking and t!e damage done to t!e re'utations of Brands #eing marked. Before going on to descri#e some of t!e common manifestations of E-5raud& some mention s!ould #e made of its non-tec!nical under'innings& $!ose influence can #e discerned t!roug!out.

B. SOCIAL ENGINEERING
7!et!er used #" E-fraudsters& normal scam artists or more re'uta#le mem#ers of societ" suc! as o%erl"-aggressi%e car salesmen or itinerant sellers of maga8ine su#scri'tions& Social Engineering encom'asses a num#er of tec!ni,ues intended to mani'ulate t!e ;%ictim< into re%ealing or doing more t!an t!e" ot!er$ise $ould if t!e ;%ictim< !ad t!e o''ortunit" of t!inking a#out $!at t!e" are doing. !e social engineer $ill fre,uentl" attem't to 'ressure t!e %ictim into acting immediatel" (e.g. ;Your Account $ill #e closed in 6: !ours if "ou don-t click on t!e link #elo$ to u'date "our Account info< or ;I Dust !ad t$o ot!er cou'les looking at t!is car earlier t!is morning!<) or entice t!e %ictim to act instincti%el"& 'la"ing on t!e Mkindness of strangers- (<If someone does not !el' me mo%e m" murdered !us#and-s mone" out of t!e countr" soon& t!e corru't officials $ill 'ocket it all and lea%e m" kids $it! not!ing< or ;)on-t "ou $ant to !el' me earn m" $a" t!roug! collegeK<). +t!er common 'lo"s of t!e Social Engineer include t!e incor'oration of information 're%iousl" o#tained to lend t!eir effort more legitimac"3 or to 'resent t!eir a''roac! so as to a''ear to #e 'ro%iding t!e %ictim $it! some %alua#le assistance. 7!ile some e/am'les of t!is ma" amuse us& t!e core tec!ni,ues can #e used to de%astating effect in t!e !ands of a good Social Engineer and $!ile t!ere $ill al$a"s #e a

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tec!nical element to contend $it! in regards to E-5raud& t!e !uman element cannot #e

C. PHISHING
+t!er$ise kno$n as ;carding< or ;#rand s'oofing<& '!is!ing refers to t!e use of (usuall") emails 'resented in suc! a $a" as to seem official communications of a #anking& ser%ice or retail organi8ation& 'rom'ting t!e %ictim to NconfirmN some of t!eir confidential data. Information targeted fre,uentl" includes login details& credit card or #anking account details& )ate of Birt! and Social Securit" 0um#er. "'icall"& t!e 'rete/t of t!e communication is some sort of securit" measure #eing im'lemented or res'onse to some 'ossi#l" fraudulent use of t!e account& t!e scam #eing su''orted #" t!e inclusion of official looking images and 'resented $it! some sense of urgenc". !e mec!anism used to garner t!e target details can differ #ut fre,uentl" make use of an o#fuscated link in t!e email a''arentl" leading to t!e official site #ut in actualit" leading to a !acked ser%er t!at t!e 'er'etrator(s) of t!e scam u'loaded $e# 'ages& images and scri'ts to. !e gat!ered data is t!en eit!er stored to a !idden area on t!e same ser%er& or to a different !acked ser%er or sent to a t!ro$-a$a" email account t!at t!e !acker $ill monitor for t!e duration of t!e scam.

D. PHARMING
Some$!at of a trend" term for a t"'e of '!is!ing. Intended to descri#e a more ela#orate form of '!is!ing& in%ol%ing more tec!nical e/'ertise to accom'lis!3 in actualit" it is Dust 'art of t!e #road s'ectrum of '!is!ing.

E. ADVANCED FEE FRAUD

Be'resented in large 'art #" 0igerian or :2@ Scams& t!ese are t"'icall" re'resented #" emails 'ur'orting to #e from someone !a%ing large funds a%aila#le o%erseas t!at& if not mo%ed out of countr" soon& $ould #e lost. !e fraudster 'leads $it! t!e %ictim for t!eir !el' in mo%ing t!ese funds to t!e %ictim-s countr"& in return for $!ic! t!e fraudster generousl" gi%es a 'ortion of t!e funds. Co$e%er& !a%ing once #aited t!e %ictimJs interest& t!e %ictim needs to outla" some funds of !is or !er o$n in order to initiate t!e 'rocess. !e descri'ti%e details in t!e email 'la" on t!e 'it" and kindness (not e/cluding a little #it of greed) on t!e 'art of t!e %ictim to furt!er t!e scam.

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F. IDENTITY THEFT
Identit" !eft refers to t!e unaut!ori8ed use of falsel" o#tained 'ersonal information. !is info is fre,uentl" used for t!ings suc! as credit card a''lications& 'icture I) card a''lications& domain registrations& etc. !e idea #eing t!at an" use or misuse of t!ose ser%ices $ould #e traced #ack to t!e Identit" !eft %ictim& t!us em#roiling t!em in !a%ing to disassociate t!emsel%es from t!e acti%ities of t!eir 'ersonal nemesis.

G.CREDIT CARD FRAUD

7!et!er o#tained %ia '!is!ing or ke" logging roDans& credit card information is acti%el" traded 'u#licall" in 7e# forums and IBC C!annels or %ia more discreet means suc! as 'ri%ate Instant 1essaging net$orks or emails. !is info is t!en used to 'urc!ase goods or ser%ices& using %arious tec!ni,ues to make it difficult to trace t!e reci'ient. !e transactions are done on sites (termed as Jcarda#leJ) t!at do not restrict s!i'ment of goods to t!e same address or region as t!e #illing address of t!e card o$ner. )eli%er" is fre,uentl" made t!roug! dro's t!at are !andled #" ot!ers for a fee and su#se,uentl" re-s!i''ed to t!e 'er'etrator of t!e fraud. As more and more 'eo'le connect to t!e Internet& online fraud is on t!e rise.

H.AVOIDING E-FRAUD
Alt!oug! e-fraud is not common'lace (onl" a#out >.>9O of all #usiness to consumer transactions)& it does !a''en. An"time "ou make an online 'urc!ase or sale "ou s!ould #e $ar". Alt!oug! im'ossi#le to eliminate& $it! t!e 'ro'er care "ou can ensure "ou are ne%er t!e %ictim of online fraud. 5or an"one $!o !as e%er #een a %ictim of e-fraud t!e 'ro#lems $it! com'ensation can #e endless due to t!e 'ro'erties of t!e Internet. 7!en online& "ou ma" ne%er kno$ e/actl" $!om "ou are dealing $it!. It ma" #e someone $!o li%es on t!e ot!er side of t!e $orld. Besol%ing 'ro#lems $it! someone "ou do not kno$ can #e more com'licated in long-distance or cross-#order transactions. racking 'eo'le do$n is %er" difficult& as indi%iduals $!o commit online fraud can disa''ear $it!out a trace. 7e#sites can #e created& used to commit fraud& and disa''ear in a matter of da"s. !e almost com'lete anon"mit" of t!e Internet allo$s for man" fraudsters to a%oid #eing caug!t.

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I. TYPES OF E-FRAUD.
+nline fraud falls into man" different categories3 from unaut!ori8ed credit card use to false in%estment and e%en sales from $!at seems to #e a re'uta#le com'an". !e most common t"'e of fraud on t!e Internet $ill #e found in online auction dealings. According to t!e 0ational Consumers *eague full" GFO of Internet fraud comes from online auctions. 7!en using online auctions "ou $ill rel" on a seller "ou donJt kno$ to send "ou a 'roduct "ou !a%e ne%er seen. Sellers face a similar 'ro#lem #ecause t!e" can ne%er #e sure if t!e #u"er is on t!e u' and u'. +t!er !ig! fraud areas to note are general merc!andise sales (FO)& Internet access ser%ices (6O)& and com'uter e,ui'mentLsoft$are (2.9O). Credit card fraud is also somet!ing to #e a$are of. card to 'urc!ase from "ou. (eo'le !a%e also made a li%ing #" 'racticing in%estment fraud o%er t!e net. Being a#le to reac! large num#ers of 'eo'le t!roug! ne$sgrou's& email& and #ulleting #oards allo$s fraudsters to s'read incorrect information almost instantl". (eo'le gi%e false in%estment ad%ice t!en rea' t!e re$ards $!en indi%iduals act on t!e ad%ice !is affects e%er"one $!et!er t!e" are a #u"er or seller. (eo'le can use "our credit card num#er to make 'urc!ases or t!e" can use someone elseJs

A. TIPS ON HO$ TO AVOID E-FRAUD

!e Internet is no different from t!e real $orld in t!at as long as "ou are careful "ou can a%oid 'ro#lems. You $ould ne%er #u" a 'roduct from a stranger $!o tele'!oned "ou offering somet!ing for sale and asking for "our credit card num#er. So $!" $ould "ou #u" somet!ing from a $e#site "ou kno$ not!ing a#outK T*! /!'% a).i#! 4o" a.oi)ing e-fraud i' .!", 'i +2!: /! #a"!4&2. A.oi)ing e-fraud i' no% )i44i#&2%B i% C&'% "!D&i"!' )&! )i2ig!n#!. 7!en dealing $it! a com'an"& #efore "ou make a 'urc!ase& #e sure t!at t!e" are someone "ou kno$ and trust. Conduct researc! a#out t!e com'an" to find out t!eir track record and $!ere t!e" are '!"sicall" located. Kno$ing as muc! as 'ossi#le a#out t!e com'an" $ill allo$ for a faster resolution if t!ere are an" 'ro#lems. 1ake sure "ou com'letel" understand t!e offer. Bead all t!e information a#out t!e 'roducts or ser%ices t!e com'an" is offering. Ask for more information if "ou do not feel t!ere is enoug! 'ro%ided. *egitimate com'anies $ill !a%e no 'ro#lem sending "ou more 2E

K.E.S. College of Arts & Commerce Insurance) risk of dealing $it! t!em.

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Information. If a com'an" refuses or does not res'ond to "our En,uiries do not take t!e

0e%er Dudge a $e#site #" its a''earance. An"one can create a flas!" $e#site. Pust #ecause it looks 'rofessional does not mean it is run #" a 'rofessional! 0e%er gi%e out financial or ot!er 'ersonal information suc! as #ank account or credit card num#ers unless "ou are sure t!at t!e com'an" is legitimate and t!e information in necessar" for t!e transaction. Credit Card 'a"ment is safest #ecause "ou can dis'ute t!e c!arges if t!e goods are misre'resented or ne%er arri%e. T*!'! %i+' #an /! a++2i!) in Fo" !9a +2!: on2in! a&#%ion'. Be cautious $!en using online auctions. E#a" !as features t!at allo$ "ou to researc! t!e 'erson "ou mig!t #e dealing $it!. !ere are also Internet middlemen "ou can use for online auctions. an, )i44!"!n% #i"#& '%an#!'.

Escro$ ser%ices like tradesafe.com can !el' to 're%ent #eing ri''ed off #" !olding "our mone" until "our 'urc!ase is deli%ered. N!.!" %"&'% in.!'% !n% a).i#! "!#!i.!) .ia ! ai2B /&22!%in /oa") o" N!-'g"o&+. I4 ,o& 4!!2 a %i+ i' g!n&in!B "!'!a"#* %*! #o +an, /!4o"! Yo& !.!" +&"#*a'!. 5or small #usiness merc!ants credit card fraud is a %er" real 'ro#lem. 1ost do not !a%e t!e resources to discount lost sales. Because credit card la$s 'rotect t!e o$ner& t!ere mig!t #e no recourse for a merc!ant and t!e" $ill end u' $it! no 'roduct and no 'a"ment. !ere are a num#er of $e#sites t!at are s'ecificall" designed to !el' small #usinesses deal $it! fraud. Antifraud.com offers #usiness o$ners tools and resources to !el' fig!t fraud.

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BIBILOGRAPHY
2. !tt'.LL$$$.indiancommodit".comLagecommerceLagecom)efense.!tm 6. !tt'.LLtruelogictec!.comLecommerce-#enefits.'!' 9. !tt'.LL$$$.!"donline.comLgetonlineLE-BusinessLecommerceQinQindia.!tm :. !tt'.LL$$$.ciol.comLcontentLne$sL6>>EL2>E>@2=>=.as' =. $$$.soft'roDe/.comLe#anking.!tm E. $$$.ciol.comLcontentLne$sLtrendsL2>6262:>6.as'

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