Internet banking and its effect on businesses and people

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Internet banking and its effect on businesses and people

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Literature Review

What’s on the Internet?

What is an Internet Cookie?

How Vulnerable is the Computer System?

What does it really do?

The Problems We Are Facing:


Limiting the Use of Cookies:

European Privacy Directive on Electronic Commerce:


Where Does the Problem Lie?

The Issues:

Who gets to take part in the Data Processing Transfers?


The problem:

Rights of Privacy:

Security and Information Systems:

Organizational Impacts/Issues:





The Internet has helped man to carve a world in which everything is a short distance away. It has aided a globalized world in which the speed of transportation and communication is quickened. People do not have to wait for long periods for many things that they used to have to wait for. Reponses are quickened and made so much more convenient to the extent that one can even get a number of jobs done while sitting at home. This indeed refers to the availability of facilities on line that allows one utmost convenience. A person can now access his or her bank account on line and have bills paid. In addition to this, direct access allows one to perform a number of transactions, which allow one the convenience of sitting at home or even saving time when one is at the office. No doubt, there is so much that Internet banking has provided for people today, and businesses save an immense amount of time as well. However, doubt has been cast on Internet banking because of the chances of interceptions during a transaction. Some people and businesses fear that their accounts can be interfered with as they conduct transaction on line. Passwords, usernames, and other confidential information are believed to be at risk because of particular internet functions. It is known that most of the internet functions aid a person during daily usage of the Internet, but it is thought that these same functions such as Internet cookies are capable of revealing information that is naturally undesired. The result is that there is considerable confusion over the safety of Internet Banking though the world is largely turning to this facility that both time-saving as well as convenient.


The world in which one lives today is indeed a fast-paced one. This fast-paced environment has evolved because of various actions, each of them interacting and producing a variety of results, and creating effects that favor the current situations today. This may all sound complex, but in truth it may be simply described as a vast number of actions causing a very situation that one witnesses today. This complex situation does not mean that there is total chaos because there is in fact an organized system in place. This organized system is one that helps many countries stay in contact with each other. However, the system is not one that favors friendship, but actually focuses on economic gains; countries are motivated in this system to work towards their own gain. They stay in touch with each other for the purpose of suiting their own needs. It is obvious that they would not do things on a charitable basis for another country when they could actually invest time and money in bettering their own conditions. Due to the availability of the Internet, countries are able to remain in close touch and trade easily.

Online communications have facilitated countries well enough in order to raise their standards of living, and it is on the basis of this tat many people have turned their lives around.

Aside from the globalized environment within which one may operate with the help of the Internet, it must be asserted that there are also other means of keeping in touch with other countries. Transportation for one is an important means of remaining in touch and working with other people. In view of this, it must be asserted that the businesses and other operations can be enhanced this way. With speedy communication on their side, a business has better scope of advancing.

It must be realized that competition is facilitated well in the global system, and the globalized features aid countries in participating in different kinds of competition whether it is business, sports or a mixture of the two. In view of sports and business in the form of a mixture, it must be asserted that there is great focus on the business part of the mixture.


Observing the manner in which there are so many people accessing the Internet daily, there is need to look into the types of users that are online. In addition to this, there is need to realize how many people are dependent on the Internet for transactions through banks. In view of this, there is due consideration given to the number of important businesses trading through the Internet. Each of these forms a small but significant part of the daily online business. Reviewing literature that pertains to businesses and people’s lives and activities being affected by Internet banking is indeed an appropriate way to assess the effects of Internet banking. Through this review of literature, there is a great deal revealed about the safety of the process and what the risks of Internet banking might be. Each point is discussed at considerable length and targeted from an unbiased and broad angle. This has helped to present the facts as reported in the sources and allow analysis to be conducted fairly.

Analyzing the literature reveals to what extent the fears of Internet banking are real, and how many people still continue to use Internet banking facilities. Aside from this analysis, an analysis of the arguments made reveal to what extent effects of Internet banking is legitimate. With both analyses, the effects of Internet banking and the authenticity of it as well are exposed.

Sources for the literature review are ones that are relative to the issue and are authentic, as they are taken from books, journals as well as official websites, newspapers and magazines.

Literature Review:

There is plenty of doubt cast over the safety of transactions via the Internet. In particular, Internet banking is an issue of grave concern even though most people are turning to the Internet for the sake of convenience and saving time. In addition to this, businesses and individuals too have little choice, and in time to come, everyone will be compelled to use Internet banking services.

What’s on the Internet?

The problems that one faces with Internet transactions by and large have everything to do with the interference that one receives from files such as Internet cookies and hacking software, and these are the kinds of things that can damage the confidence with which consumers, retailers, etc. conduct day to day business. These are files that are able to interfere or extract personal information from any computer that it enters. This can take place at any time when we are surfing the net or opening up any important website.

What these Internet cookies actually do is they enter a user’s Personal Computer when it is on, and then settle itself into it. When the user switches on the P.C. again, these files are activated, and send information back to the site that it came from. Thus it helps to maintain a record of the patterns that a particular Internet surfer uses. In doing so, these Internet cookies can use these patterns to keep sending the user information, available schemes, attractive offers etc. from different companies that are relevant to the kind of sites that s/he downloads. This is sometimes seen as an advantage because of the good schemes that might come up with the use of Internet cookies, but aside from this there may be serious implications. There could be very personal information that could be leaked out at the same time of using these cookies. This is essentially a problem for business organizations because there may be some very sensitive information that could be leaked out due to these cookies, and therefore, jeopardize the business.

Further, this is such an acute problem that could eventually affect the reliability with which we are presently trading locally and internationally, and could very well destroy the whole concept of globalization. Along with the Internet cookies are the software hackers that are seemingly more inclined towards executives’ computers than governmental ones. It seems that they have lost interest in the heavily protected security systems in places like banks, perhaps because the risk is far too high. They are becoming better and better at entering the personal accounts of executives for the simple reason that they are easy targets and the rewards are fruitful. For this reason there is a constant quest to develop software that is able to track the entry of a hacker. Even so, it appears that this protection is not enough, as it is said that there is no software that can give one hundred percent security (Boulton, C. 2001).

To begin with there is a very good phrase that could be aptly applied here, and it says, “when in doubt, don’t”. We have been, for quite some time now, debating over the effectiveness, the danger and the benefits of the Internet cookie. The truth of the matter is that there is very little that we really do know, and indeed very little that one can be sure of regarding the same. One cannot really be sure about the way that the Internet cookie works. It can be responsible for destroying lives, indeed millions of lives. Critics on the other hand, argue that there is nothing to be worried about, as these Internet cookies are harmless text files that extract only information of search patterns. They say that it does not retrieve personal information, such as e-mail addresses. In response to this, we cannot really say whether the capability of the Internet cookie is related to this alone. If it is capable of tracing and recording search patterns, it could be capable of extracting more than just this. This is the reason why, many a time, one can come across, especially after a particular website has been down loaded, un-requested mail seeps into ones account. Surely, this is no coincidence, but purely a result of the Internet cookie picking up ones personal information. If this had been a case that occurred rarely, it would be unfair to blame it on the cookie. However, this happens much too often. Also, there may be more serious security concerns; national security concerns.

What is an Internet Cookie?

Internet Cookies are actually short pieces of data that are used by web servers in order to identify a web user. This has led to rumors and stories have been created and built upon to such an extent that people around the world are worried about their privacy. It is especially of great concern when it comes to a matter of national security. Can you imagine what would happen if terrorists got hold of valuable confidential information?

Cookies are only used to identify a web user and the habits associated with the user. None of the data retrieved by the Internet cookie is destroyed or misplaced. If managers or business organizations are deeply concerned in this regard they can always adopt the use cookie blocking packages. This would restrict them from being identified, as the browser won’t accept any cookies. But this to a certain extent inhibits the functions of servers. We must also remember that by blocking Internet Cookies we are not putting a stop to ourselves from being identified but we are only making it more difficult to be identified. (CIAC Internet Cookies 1998)

How Vulnerable is the Computer System?

This problem is virtually non-existent. What these little pieces of information do is tell the server whether one has already browsed through a particular site. This is made possible by the fact that the cookie uses the information of the browser like the user number. This is probably the reason why people have started to fear it. The questions asked might be what does the cookie do once it knows our user number?

Most Internet cookies last only for a short while, that is they don’t exist once one has quit browsing. There is also another kind of cookie that exists, for instance there are cookies that have their expiry dates fixed. These are called persistent cookies and their expiry dates are stored on the user’s hard disk (CIAC Internet Cookies 1998)

What does it really do?

The persistent Internet Cookie can be used to track the user’s searching habits whenever he or she hooks up to the web. The cookie already knowing where you come from and the type of files that you tend to access does this.

It is actually assumed that a user’s personal information can be tapped in to while the cookie is in existence. Confidential information such as credit card numbers and passwords can be gathered. Rumors have it that these cookies are detrimental programs that expose your privacy. (CIAC Internet Cookies 1998)

What the server actually does when you access it is that it sends you a cookie that you send back to it every time you request data from the same site. It is widely believed that during this process the web server can extract personal information from the user.

A cookie is sent to a browser that includes a certain amount of syntax in the header of an HTML document. The header is already removed from the document before the browser displays it. Hence the header will not be visible if you execute the View, Source or View, Document Source commands in your browser. (CIAC Internet Cookies 1998)

Cookies are only short strings of data that are sent from a web server to web browser when a browser visits a particular site. Undoubtedly the Internet cookie is stored on your computer and only comes in to operation when you visit a website. It is certainly not an executable program that can filter out confidential information as rumors have it. (CIAC Internet Cookies 1998)

Cookies are thought to be harmless by their users. Further more they are of extreme help though critics suggest that they are digital agents of bother that are potentially capable of great harm to your computer as well as to your privacy. The truth of this criticism falls somewhere in between; this is when one observes that they can be of great help in searching out what we want or they can make you the recipient of a whole lot of junk mail. This is when your PC can get corrupted and valuable information lost.

According to a report on Internet Cookies released by the U.S. Department of Energy’s Computer Incident Advisory Capability noted: “The popular rumors about Web cookies describe them as programs that can scan your hard drive and gather information about you including: passwords, credit card numbers and a list of the software on your computer. None of this is close to the truth”. (Solver, 1998)

The problems have started since the time private citizens and businesses were allowed access to the Internet. Allowing them access was important because this meant an overall benefit to the country with respect to finance. Since the access was allowed businesses were not the only ones to benefit from this form of communication. Virtually every man in the street is aware of the many wonders the Internet can provide. Among these people the evildoers can be found such as ones who release software viruses into cyberspace and hackers. (Author not available, 2001) And what is worse is the fact that the number of these elements of our society seems to be growing larger day by day. In order to deal with them every day there are a large number of programs being created to protect our valuable and personal information. However, the problem remains that there isn’t any one such software program that can guarantee us one hundred percent safety. (Lazarus 1998)

The Problems We Are Facing:

Internationally people find themselves victims of junk mail every year, and it is this mail that accounts for ten million dollars being spent annually as a result. A lot of money every year is also spent on Spam. (UK Electronic Communications Bill) Spam consists of everything from pornographic material to schemes on how to get rich in no time. These are actually spread out far and wide in order to exploit the interests of people who have got nothing else better to do. Even though companies have tried their level best to restrict the amount of junk mail they receive just isn’t enough[1]. Companies have been known to receive up to eighty percent Spam in spite of software protection being implemented. (Lazarus 1998)


This is a neat ploy to curtail the amount of Spam filtering in but is it intruding our privacy? It is said that having cookies on your PC seems to encourage more Spam.

How many companies have tried to solve this problem?

Hundreds of Software companies have attempted to solve this Cookie problem but most of them face a number of limitations and fail to contend with it.[2]

It is intriguing to know that when we are hooked up to the web we are constantly presented by messages offering us cookies. The fact is that companies are now using these in their sales kits in order to boost their sales. People might think that it is obvious that if we want to purchase something from the net we will opt to request it ourselves[3]. But they miss the whole point that it is part of the sales kit being employed through the net because there are no such salesmen standing before you who can convince you that you are looking at the right product. In the field of sales cookies have had there share of success but there are certain things that they cannot achieve. They are not capable of gathering personal information from your PC and transmitting it, and they certainly cannot plant Viruses in your machine. They are much smaller in size as compared to their program files. The program files are considered to be their cousin files and this is another one of the reasons that the cookie has got a bad name. It is only the viruses that carry the real threat and should be screened by anti virus programs. Only the site that has created a cookie can read it, so that even if there is any confidential information stored in it, it will remain undisclosed.[4]

Stanton McCandish, program director of the Electronic Frontier Foundation, has said that there are still ways to abuse the information stored within and it is for this reason the European Economic Community is following a law that has made it illegal for any one to share personal identification for commercial uses without the consent of the person concerned. (Lazarus 1998)

The best way to turn out a Cookie is to turn them off completely. The only minor problem is that the same website from where we’ve turned out the cookie becomes inoperable. You will realize that the site where you’ve rejected the cookie’s use will steadily decrease in speed and almost to a halt. (Lazarus 1998)

It has also been known that the web server continues to transmit information to remote websites. It is this information that can help trace the paths you take and store this information at their sites rather than them storing it in your PC. Web browsing habits are being recorded no matter what you do to prevent them from being recorded. Even the most effective “anonymizers” will not prevent Web browsing habits from being recorded. With this kind of prevailing situation it is no wonder that we find people worrying about their safety and privacy. The following that are not considered safe are: e-mail, browsing habits, news group postings and to be safe the contents of the hard drive of any machine hooked to the Internet. All important work and important information should be scrambled using encryption software if confidentiality must be maintained.[5] One thing that we must remember is that no matter what kind of elaborate set up we have, no matter how secure it is supposed to be, someone somewhere is able to read our work and personal information. In his own words Mclandish said, “I don’t trust in Internet security, but I don’t actually distrust it.” He believes that there is no such thing as one hundred percent bug free. (Slover, 1998)


Many federal bodies are using Internet cookies in order to trace out visitors of their sites. The cookie has unique identifiers with them that are used to retrieve and store information that enable website owners to recognize regular users of their sites. There are two types of these text files; the first is called “session” and the next one is called “persistent”.

“Session” cookies expire as soon as the user cuts off contact or exits the browser while persistent cookies are the ones that have the ability to remain on your PC for a certain amount of time depending on the date of expiry.

The Office of Management and Budget addressed the use of cookies on federal websites[6]. It stated that the use persistent cookie was prohibited on federal websites. It also stressed further that persistent cookies could only be used by agencies when:

  1. Provide clear and conspicuous notice of their use,
  2. Have a compelling need to gather the data on-site
  3. Have appropriate and publicly disclosed privacy safeguards for handling information derived from cookies,
  4. Have personal approval by the head of the agency


Along with other things the cookie has stored on along with its name, are its unique identification number, its expiry date and its domain. What happens when a browser requests a particular page from the server that sent it the cookie, it sends the same back to it. Generally speaking most cookies are actually placed in our systems by the web sites that we visit.[7]

Aside from this some sites allow a third-party cookie to enter them. What we mean by third party cookie is a cookie from another domain being placed in the PC of a user and then being sent to another website to recover a page that is required. These cookies may be either “session” cookies or “persistent” cookies. Session cookies are generally short-lived and are used or are active only when a user is on line. They are automatically deactivated when the user exits the browser. These kinds of cookies can generally be used in interactive opinion survey. (Government Accounting Office Report, 2001)

Persistent cookies are text files that remain stored on an individual’s PC until a specified date of expiry. These can be used to trace a web browser’s browsing patterns. Noting the browser’s linkage with other relevant data does this. Although these aid us in commerce there are also the big questions of privacy risks due to their usage, even if they themselves do not collect the identifiable data contained within them[8].

Links may be made even if it was not the actual intent of the website. For instance, individuals searching through a particular website are sometimes compelled to feed in some of their personal information such as names, e-mail addresses, telephone numbers, etc. What happens is the persistent cookie links itself to this identifiable personal information and this makes it easy for the path or pattern of the browser to be retraced. This is the practice that has led to much concern of visitor’s of federal websites.

(Government Accounting Office Report, 2001)

Limiting the Use of Cookies:

Browsers such as Microsoft’s Internet Explorer accept cookies that are able to track a user’s pattern of browsing. Presently browser designs allow browsers to block the cookies upon request, and the Internet Task Force recently proposed changing browsers in order to automatically block them. This would largely limit their use.

A survey found that cookies are an integral part of IAB (Internet Architecture Board) companies and are particularly used in measuring site users, developing user profiles for advertisers and for advertising targeting, the vast majority of respondents said. They also indicated that cookies are important to plans that are used to support higher value for advertising.[9]

Respondents have overwhelmingly favored cookies, as their use will benefit both marketers and consumers by helping to ensure the right message reaches the right targeted market at the right time. In addition to this it was found that more than 85 percent of respondents opposed having their browsers set to automatically disable the use of cookies. Further, in the survey it was estimated that 80 percent of the IAB members did not see cookies as potentially threatening. Although there were a few who felt that consumers might feel that the use of cookies is an invasion of their privacy. Others described this to be a misperception.

In another piece of research it was found that 86 percent of respondents said that there was a need for a dependable and consistent form of “digital identification”. The reason for this is the importance of increasing Internet advertisement revenues and improving consumer experiences on the Internet.

European Privacy Directive on Electronic Commerce:

Electronic commerce that takes place within the European Union member states should be aware of the European Union’s Directive on Privacy Protection. According to the Directive, it treats privacy as a “basic human right” and encourages the European Union states to ensure its protection. This will have an affect on the smooth running of all electronic commerce within the Union. Adherence to this “minimum standard” is what is required of member and nonmember states. The minimum standards refer to the processing of personal data of the identified or the identifiable person. Our attention is drawn in particular towards article 25. This article prohibits the transfer of any personal data to countries that are outside the European Union to countries that don’t provide ample protection of personal data (Taylor 1999).


It is obvious that privacy needs to be protected as much as possible. If one’s privacy is not protected in the manner it should be, there can be no guarantee about anything on the Internet. It also means that democracy is only limited to the physical space that people live in and cannot be extended to cyber space. The differences between existence in one’s physical space and cyber space have been disputed for a while; many are skeptical about the extent of control that authorities have in cyber space. This is legitimate to a great extent because of the fact that there is little control over programs that are not visible and sometimes not even detectible.

Federal laws and various other approaches have been sought and rightly so because in time to come it is expected that one will be dependent on the systems that are presented to the common man. This means that if Internet banking systems are ones that the common man is compelled to use then there will be little or no way of escaping it. Whether or not risks of security will be present or not is another matter, but with the way that everything is being globalized it is expected that Internet Banking will grow more and more common. Undoubtedly, this is a necessity for the pace of business to increase and greater gains to take place. However, the problem is that there has to be a way of dealing with the current security problems that are feared. Only appropriate litigation and technological advancements can deal with these, and it is hoped that some solution will be formulated.

Where Does the Problem Lie?

The member nations that adhere to the above law will benefit because they will receive unobstructed information within the Union and will also have access to its market. States that do not adhere to the law or cannot guarantee the privacy of personal data, the Directive may pose as an immense Trade Barrier. (Taylor 1999)

For example US companies may be subjected to penalties or may even be denied access to the European market if they fail to protect the privacy of European customers. This may even be imposed without them exhibiting an actual breach of privacy[10]. What could implicate the directive too is every Internet transaction that is made through the US with a European consumer. It is even likely that the Directive would apply to the transmission of email for business and academic purposes. (Taylor 1999)

The Issues:

It is said that the Directive does not define “adequate” as a general form but stresses that adequate will be defined on a case-by-case basis, so that they are able to take into account the prevailing circumstances that surround the data transfer situation. Due consideration will be given to “the nature of the data, the purpose and duration of the proposed processing, the country of origin and destination, general and sectoral rules of law, and professional rules and security measures which exist in the destination country.” In case any inadequacy is found there may be serious consequences. (Taylor 1999)

There are several exceptions to article 25, the prohibition of transfers, which are listed in article 26. One of these exceptions states that a member state may authorize data transfers to a country whose laws do not meet Article 25’s “adequacy” standard if the “controller” (the body able to determine the “purpose and means” of the processing) can show “adequate safeguards” to protect privacy. Article 26 also recognizes that contracts have a duty to perform in ensuring protection, but it does not define this any further. (Taylor 1999)

The following is an abstract from Perkins COIE[11]

The Discussion Document identifies six “principles” by which the adequacy of a country’s data protection may be gauged:

  • limitation of purpose-data processing should be limited to a specific purpose;
  • data quality and proportionality-data should be correct and, where appropriate, kept current;
  • transparency-the purpose for which the data is processed, as well as the entities in possession of the data, must be known to the concerned individual, and individuals must receive any other information necessary to ensure “fair” processing;
  • security-data should be protected by security measures commensurate with its sensitivity;
  • access, rectification and opposition-individuals must have access to data concerning themselves, the ability to correct errors and the right to object to some types of processing; and
  • restrictions on forwarding data-data may not be forwarded from one country to another unless the destination country also ensures adequate protections. (Swire & Litan 1997)

“Sensitive” data also encompasses extreme requirements, which include racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, health or sexuality. The Working Party includes transfers that involve:[12]

  • risk of financial loss, such as Internet credit card payments;
  • risk to personal safety;
  • decisions significantly affecting an individual, such as recruitment, promotion or credit;
  • embarrassment or harm to an individual’s reputation;
  • the potential for significant intrusion into an individual’s private life, such as unsolicited telephone calls;
  • repetitive transfers of large volumes of data, such as transactional data over telecommunications networks or the Internet; and
  • covert data collection, such as Internet “cookies.” (Swire & Litan 1997)

The working party further notes that there might be a greater need to providing protection to “sensitive” data. It also believes that individuals ought to have the option to “opt out” of data processing systems, and also have a right to know what is going to be done with their data and where all it is going to be transferred. “Adequacy” will not only depend on the amount of privacy laws but it will also largely rely on the enforcing implements that are available to them, such as

  • how likely a country’s laws are to ensure a high level of compliance, the existence of effective sanctions and the extent to which data controllers and individuals know the law’s requirements;
  • institutional means available to individuals to enforce their rights without undue cost or difficulty; and
  • mechanisms for redress, including arbitration, compensation and sanctions. (Swire & Litan 1997)

Who gets to take part in the Data Processing Transfers?

This discussion is relevant to third countries. There will be a preparation of a “white list” of countries whose privacy protection laws are considered as “adequate”. All types of data transfer will be evaluated on a case-by –case basis with considering the risk that is involved in the transfer process and also the protection that is available in the destination country. Contractual provisions are to be used as a precautionary measure but only sparingly as they have inherent problems. The working party will issue the guidelines for these contracts.

Common Questions Regarding European Trade with the US:

  1. How can U.S. businesses involved in data transfers in Europe adapt to the Directive’s requirements given the absence in the United States of a European model of centrally administered national privacy rights?
  2. What can be done to maximize the likelihood that European officials will find data processing practices “adequate”? (Swire & Litan 1997)

Due to the fact that critical provisions of the Directive are poorly defined, these questions are difficult to answer. This results in a vast discretion to European officials charged with their interpretation. Further more it isn’t easy to see how the model of control can be applicable non-mainframe technologies that decentralize the use of data, which include client-server systems, corporate intranets, e-mail and even portable, laptop computers, all of which can be used to transmit personal data and of course the Internet. These all can be used to send and retrieve data. (Swire & Litan 1997)

The one European member state that has noted that the Directive is not suited to regulate Internet transactions is the United Kingdom. However, the US Robotics was fined thousands of Pounds in accordance with the United Kingdom’s Data Protection Act because it obtained personal information of individual visitors and was not registered under the Act. It had used the personal information to market their goods. (Swire & Litan 1997)


Businesses should be familiar with the Directive and should carry out their own evaluation in order to get an idea of where they may be penalized. Bodies that are likely to be available for this purpose will demonstrate objective, verifiable and effective mechanisms to ensure data protection. This will aid companies in challenging determinations of inadequacy in the event of them occurring (Swire & Litan 1997).

There are certain categories of data transfers that are necessary to carry out a contract to whish an individual may consent. In this case it may be permitted as it fits in with one of the Directives exceptions in Article 25. Simple modifications to everyday data processing in other cases may cut down the risk of unintended violations. Notice Provisions of the Directive should also be reviewed and put into action along with business practices. It may also be of some use pinpointing the risk that exists between the US and European bodies contractually. Present contracts should be reviewed and modified according to its requirement. Internal codes of conduct may also help towards existing protections. There are also several standards that aid preserve privacy Internet transactions. The “P3 standard” proposed by the World Wide Web, proposed a platform for Privacy that will enable computer users to be informed and make their choices about the collection, use and disclosure of their personal information on the Web. Implementation will result in companies being aware of between a site’s privacy practices and a user’s privacy preference. (Swire & Litan 1997)

“OPS”, the Opening Profiling Standard, is another proposed standard that permits the exchange of information along with the safeguard tags of privacy. It provides individuals with an option to submit their information and also submit rules as to how and when the given information can be exchanged with services. (Swire & Litan 1997)

Europe has come a long way in trying to make the world conform to privacy standards that they are trying to set. The Directive emphasizes on specific conditions that must be met in order to legally process personal data. This stresses that personal data must be processed fairly and lawfully for the legitimate purpose that it was collected. No further processing is permitted. It stresses that it must be “adequate” accurate and regularly updated. The data need not be stored for a longer period than is actually required. Further more the processing may only take place when the data of the individual has given his or her “unambiguous consent”. (Mayer-Schonberger, 1998)

This overwhelming European Directive stresses on restriction of access to personal data. It almost stresses that all aspects of the Internet cookie are violations. This is due to the fact that Internet cookies make unintended and automatic access to personal data. That is the reason why even the simplest of cookie implementations violate the Directive at various levels, and the use of cookies poses serious legal problems with the European national data protection laws. The main core of the problem with the European Directive is that it has serious implications with the United States and its laws. (Mayer-Schonberger, 1998)

The Internet cookie is something that is new in technology that has many different sides to its argument and it is important that the consumer is aware of both the uses of it, good and bad. (Esquire 1997)

The problem:

There is no reason why there can be only one type of Internet cookie. There may a wide range of them, or even ones that are in disguise. The fact is that we don’t really know whether or not they do exist in other forms as well. Most of the explanations put forward regard them as harmless and incapable of leaking out personal information, unless it is voluntarily given to them. But people seem to be taking these assumptions to be the Gospel truth. It is only when they face a real threat or a real breach in security that they might wake up with a start. These Internet cookies are ones that should be taken as seriously as hacker software. This is because one does not really know whether or not these Internet cookies are used to first retrieve the valuable or sensitive information, and then use it to hack someone’s financial transactions. For all that we know they could be going hand in glove, working in tandem to get their job done (Slover, P. 1998).

The kind of software that is available to deal with these kinds of problems is ‘Authentication and Encryption Software’. These are the kinds of software that is capable of dealing with foreign data sneaking in undetected. What it does is it does not allow anything to enter the software that it is protecting, unless it bears a particular code. This code is like an identification code. (Authentication and Encryption software, 2002)

Rights of Privacy:

Security of personal information is a subject that is considered very serious. Using, copying, etc. any ones personal information or organizational information is considered a serious offence. This is the reason why there are so many laws made for the same. There are very strict laws that have been made because of the misuse of information. An example of a law or policy that a company might establish and stick to is the use of Internet cookies. The laws that are made stand a chance of being broken, and this is not jut a risk for the people who use Internet facilitated companies, but is also one for the company that is providing services using the Internet and holding people’s personal information. This is because they too stand a chance of being deceived in the same way that a user of the same does. Along with this, there may be other kinds of software interference too that could cause personal information to be leaked out. This is not limited to software being used for this but also means that people within a company might decide to misuse the information directly. If this is the case then customers will lose their faith in these organizations. This is especially the case where there is a use of wireless laptop computers. However, the company cannot give any excuse for the same, and is still likely to face legal action for it. This is the reason why they have to be extremely vigilant over their software protection and ensure that their client’s personal information is not misused and does not get into the wrong hands. (Slover, P.1998).

A company might want to use an Internet cookie to track a users surfing patterns. But this should be stated in the policy. If this is not stated, then the user can take legal action against any company for not informing him about the use of the Internet cookie (Martinez, M. 2002). Usually an organization should not mind if there is a presence of these cookies in their systems because this helps a person to search and obtain quicker results, though, most people don’t like the idea, and prefer to be informed prior to their personal information being used. This is especially the case as far as organizations are concerned because this is something that could affect their trade relations. People would not want to do business with them if they found that there was no security in their means of financial transactions. They certainly do not want any interference with their transactions and do not want to allow any company to send files that will track their browsing patterns on the Internet. By the use of these files other competitors can get in touch with their sensitive information, and result in total chaos. This is where these organizations can implement software programs such as Kerberos, MD5, MIME Object Security Services (MOSS), OPIE, PGP, RIPEM, Skey and SSH.

Security and Information Systems:

An example of the misuse of personal information that may occur and result in possible loss is when the name and e-mail address of a person is recorded by certain software in one scheme on the Internet and is used by another related site. This can take place when an individual or an organization punches in information such as date of birth or e-mail contact for the simple purpose of receiving information. It is this information that should be kept secret and not shared with any other sites. Sadly, this is the common scenario. And, this is especially the case when one opens up unauthentic sites. Their very appearance seems to be so highly designed that one can be easily deceived. And, then later, these are the same sites that are responsible for leaking out an individual’s personal information. What actually happens is, these Internet cookies extract this information, and share it with other related sites that are similar to the one that has been accessed. This is something that is most objectionable on the part of the user, as it takes away his or her the right of privacy. In addition to this, the issue arises because the company that has just taken the information might or might not be aware that they have Internet cookies using the information that their customers have been sending them. In the long run, this could affect the business of the same. Examples of this are seen when one downloads a site, for example, a site on airline tickets. At that very moment, one will get a whole lot of ads popping up, that are related to cheap airline fares. This is actually a result of the way that the Internet cookies have used the information that the user has sent to get the airline ticket fares. This happens because there are so many of these Internet cookies that are floating in cyber space, waiting for an opportunity to get hold of anyone with the search patterns for airline tickets and fares. Another way is that the Internet cookies have already got into the system that the user is browsing. From here, it can easily get into the user’s PC and extract the required information. This is something, as said before, that the airline might not be aware of. But it is something that is actually their responsibility to deal with. They are the ones that are taking the users personal information and processing the same, so they are the ones who are directly responsible for ensuring safety to the same of the user. If security, in this respect, is going to become a problem for the user, then there will be many people who will be afraid to use the services provided by the airline. This, in fact, applies to all the trading companies all over the world. There will be very few people who will truly trust the Internet as a reliable means of financial transactions, etc. The reason for this is that there are so many financial transactions that are made everyday that are potentially at risk because of these cookies and software hackers. So, for the same not to occur there must be a way of preventing these cookies from entering airline hardware, and this is directly the responsibility of the company that takes hold of a user’s personal information (Furger, R. 1998) (Slover, P. 1998). By using programs such as Kerberos, MD5, MIME, etc. an organization can also prevent any one reading their data. With the use of certain software organizations can have the data coded. In this way, no one can read the data unless the key is also presented. This is the best form of protection. But in order to do this, an organization has to have a proper budget for their security. If an organization cannot come forth with one then it means that there is no guarantee that it can provide security of personal information and financial transactions.

It is for reasons of safeguarding customers’ privacy rights that many companies using on line transactions are now also advertising their privacy policy. It is no more considered to be a formality, as this issue has become so severe that the privacy policies are seen as a must. It is absolutely mandatory that the same is advertised and printed in a size that a user cannot miss. Before this, the advertisement of privacy policy was printed in such a manner that one could hardly see it. But now things have changed, and printing it all unambiguously is seen as essential. This has all resulted from the gravity of the situation, and should give everyone a clue of what breaches in security can take place. This is essential for the business organizations because they are the ones that are dealing with finance through the Internet. The reason why these are so risky is that they can be tapped into and the finance removed if any outsider gets hold of the personal or confidential information of the company (Glass, B. 2000).

There may be a lot of argument put up in this respect, and software houses may even sound convincing that there is nothing to fear about Internet cookies, but the fact remains that these little seemingly harmless text files can get themselves into a computer system purely by accident and are able to extract sensitive information and send it out to the server that it originated from. It is very hard to believe anyone who defends their effectiveness, especially after getting to know or suspect what their capabilities are. We find us asking ourselves one a very important question, and that is, “Are we ready to trust thousands of dollars in an electronic account and know that it cannot be harmed by the presence of things that we are really not sure about?” The obvious answer would be “no”. This is the most sensible answer that indeed most organizations might give. But what if all the organizations that are aware of the same give the same answer, and surely they will, what happens to the pace of trade? Does it slow down or altogether come to a stand still? (Glass, B. 2000)

Organizational Impacts/Issues:

The fear is that there will be total chaos as a result of the realization of the situation. This is because there will be a fear in most of the people who use the Internet for these transactions. There will also be some who do not want to give up this means of transactions, and it is for this reason that there will also be many breaks in the trade relations between many organizations, locally and internationally. When this occurs the overall trade of many countries will be affected in different ways. This will reflect in the economic instability of countries, which could possibly lead to more competition taking place between the top currencies of the world.

But why does everyone have to go through all the hassle? Why doesn’t everyone simply upgrade their software with something that can free them from these cyber pests? The answer is plain and simple. There is software that is available that can detect and delete these Internet cookies and other sneaky software, but the only hitch is that they have to be constantly monitored just like the software viruses are dealt with. It is basically because of the fact that people do not take these Internet cookies so seriously that they don’t even consider implementing software that is required to combat their entry. This is because of the cost of it all. They feel that it is an unnecessary expense to do the same. The fact is that in order to guarantee almost one hundred percent protection against any sort of software threat, an organization needs to create a budget so that they can afford and the implement one that is feasible for their work (Glass, B. 2000).

Aside from the Internet cookie there is also another fear, one that is really up to a lot of mischief. These are the soft ware hackers that are on the loose. These are the people who we really have to be on the look out for, and it is extremely essential that any organization dealing in large amounts of currency exchange should have the latest software to combat these hackers. But the problem is that organizations do not take this all too seriously. Another thing is that there are certain kinds of hacking software that are developed to hack any other. These are sometimes not combated till the development of an anti hacker, which may take a lot of time to develop. Though, there are plenty of these anti hacker software available, it appears even then, computers are not safe. Nowadays, it is not a trend for hackers to target government computers. It seems that their attention has shifted to more vulnerable equipment that holds vital information of financial transactions, and can aid and reward them equally. These are much easier and lucrative targets that are, more often than not, unprotected. Priorities of the hacker, as we might think, are focused on the more important places such as banks. But hackers are much quicker to decide where they can have a field day. They can attack a computer in your home, whether one is hooked up to the Internet through the general cable or through a dial-up modem. Even with the application of ‘wall fire’, 47% of executives faced a problem of being hacked (Martinez, M. 2002). This is enough to prove how badly the same is hitting computers. However, with the introduction of Blackice PC protection, the problem seems to be solved temporarily. This software program monitors the path that the user takes to exchange the financial information and then protects this path every time the computer is switched on. When the user is on this path, the program can detect whether there is any foreign program entering it or not. It then disables the same, and the message is relayed back to the user. But even so, no software program is one hundred percent accurate. There is many a slip between the cup and the lip, and one can never say that any software program or anti virus can offer 100 % protection. This is because the software hackers seem to almost always find a way around any hacker protection. This is the reason why we have to always update our software with the latest ones (Boulton, C. 2001).

Again, in this case we can see that the pace of business can be affected. This is because of the method in which the transactions are being made are being affected or restricted. The restriction that takes place directly affects the overall process of business. This could mean more of an expense for the organization, as it will have to extend its services in some way, if it is to allow its workers to continue working from their homes. If not, then that means that business is restricted to fewer hours a day. This kind of action will definitely slow the pace of business down considerably (Glass, B. 2000).

Direct payments too, can also be affected due to the interference of hackers on line. This is the reason why it is extremely risky for a person to send his or her passwords or credit card number while they are chatting on the Internet. This is another very risky means of communicating because during this process sensitive information can very easily be picked up. It is one of the easiest software to hack. Organizations that don’t have any offices in various parts of the world have gone through a lot of hard ship in this respect. Their only means of communicating with their clients is through programs such as these. If these have to be abandoned then it could mean that a whole lot of people might suffer as a result of the same (Glass, B. 2000).

In addition to the transactions and the flow of information that are made through the Internet on a modem or a cable, we can also say that the wireless method of communication is by no means a safe mode of carrying out business these days, in fact, it is more vulnerable than the one that makes use of the cable or modem. The use of the wireless means of conducting business is supposed to be the most efficient and cost effective means of dealing with customers. But this also means that there are numerous outlets at which hackers can have access to the same. According to the latest information, these hackers go about their mischief just by sitting on Park benches or in their cars. They can detect the flow of any valuable information in cyber space and latch on to it in no time. If people were to give up this means of communicating and dealing with their customers then we would experience a sharp decrease in the business taking place. This is a relatively new way that people all over the world are doing business, as it is very easy for them to download anything from anywhere using their laptops. But again, if we have to start using software to combat these security risks, the user of the laptop would have to know how to apply the software, and even then they would not be 100 hundred per cent protected. Another reason why the anti hacker software is not a hundred percent effective is because there are a large number of technically ignorant people also using the Internet and downloading sensitive information. These people are not technically aware of the features of software such as the ‘firewall’, thus making them less effective (Boulton, C. 2001) (Glass, B. 2000)

In truth, there is very little that can be done for the purpose of Internet security at present. This is because the anti hacker and software protection that is developed at the moment is always behind the software that the hackers keep on developing. There seems to be no end to the way that they relentlessly develop the same. No matter what software is developed to combat it all, there is never a one hundred percent protection against the same. Hackers have all the options and all the angles to aim at different software, and this is the reason for them being able to develop the kind of software that they do and always keep ahead of the anti hacker software developers. The only real form of protection that an organization can look to is developing a budget. With this, the organization can decide what kind of software protection it can implement. Along with this, the organization also needs to ensure that it keeps on updating this form of Internet security so that the protection that they attain is as close as possible to the 100 percent mark (Expert Recommends Protection Against Internet Hackers, 2001).


Internet banking is a convenient means of speeding up things in everyday life. People and businesses both rely on the Internet for a variety of facilities, and these facilities need to be made safer than they are. It would be fine to accept the lack of privacy safety if it were limited to browsing. This would fine to accept because of marketing tactics and enabling of quicker searches in browsers. However, when it comes to serious issues such as bank accounts and sensitive information, it is thought that the Internet is not safe. Even if one’s bank account cannot be accessed directly, it is the exchange of sensitive information such as usernames, passwords, financial amounts, etc. that are at risk. These need to be protected as much as possible in order to make the Internet a safer place, and in order to make Internet banking more reliable and successful.

Having seen the ways in which the privacy of a person or an organization can be devastatingly affected, it is always better to play it safe and make it tough for the hackers and Internet cookies to get passed ones security system. Simple virus protections are all seen as mandatory in this age of electronic financial transaction. One would surely be ready to conduct any kind of program that would save the world from a war that could emerge due to the onset of no privacy as far as electronic financial transaction is concerned. Having said this all, one should not think twice, and do whatever is possible to even salvage the near to 100 % of protection that can help save a lot of lives being affected. In doing so, an organization can be an example to others so that they realize the gravity of the situation and therefore, follow in the same footsteps. It should also be very clear to Internet providers that it is their duty to ensure their customers of the safety and security of personal and sensitive information. It is a law like this that will ensure the tightness of a net against any breach in security. If this is not done, then in the long run we will surely find that there will be a lot of people losing their faith in the Internet, and this will directly affect the pace of business, which will in turn affect the rest of the world.

At the end again we find ourselves asking the same question, ‘What is so fearful about an Internet cookie?’[13]

Cookies have been getting a bad name due to widespread misunderstanding. The misunderstanding lies between the lines of what the cookie has intended to do and what other unintended functions it has carried out. People within the media and others too have built upon this and blown things way out of proportion. But this all needs to be straightened out and the first thing that we must do is define what the cookie really is. (Esquire 1997)

An Internet cookie is actually a small text file that is sent from a web page to your hard disk, when you access the site. The cookie is then stored in your hard drive. The same server that sent it, every time you access the same site accesses it at a later date. It is the information stored in the cookie that tracks popular links, insert personalized information, send targeted advertisements, or save customized page settings. (Esquire 1997)

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