The Internet can be dangerous if you aren't aware of its threats and don't counter them. Possibly worse, those who are aware of the threats may begin to curtail their Web use because of them. If that happens in large numbers, companies--and ultimately consumers--will incur the considerable cost of reinstating the manual operations that e-commerce eliminated, and they will lose some opportunities that are available only through electronic communications.

That is likely an overly dire prediction, since increasing numbers of people are using the Internet despite a growing recognition of the risks. But the dangers do exist. Whether you are an e-commerce developer or a user, you should be familiar with the dangers and do whatever you can to counteract them. This article examines just two types of threats, both of which menace the Web user directly rather than the e-commerce provider: spyware and phishing.

Spyware

Spyware runs in the background, usually well-hidden from the user. It can monitor computer use, collect information, and send it back to the spyware distributor. This can be as devious as capturing account IDs and passwords by logging keystrokes. Or it can be somewhat more benign, such as collecting data about which Web sites you visit so that advertisers can use that information to target their advertising.

Another class of software, commonly referred to as adware, usually doesn't transmit personal information. Instead, it monitors the Web pages that you visit and, without your permission, pops up ads for related advertisers. For example, when you visit the Brand X soda Web page, the adware may pop up an ad for Brand Y snacks, without the permission of you or Brand X. People infected with adware may blame Brand X for the intrusive advertising, thinking that it's the originator of the pop-up ads.

Because it does not transmit personal information back to the software distributor, there is some debate as to whether adware should be included in the spyware category. A broader category, malware, describes all malevolent software, including not just spyware and adware, but also viruses, worms, Trojan Horses, and so on.

Spyware and adware usually arrive piggybacked on seemingly benevolent software, such as a new toolbar, "smileys" that you can include in your email, etc. The more scrupulous spyware distributors mention this inclusion in their license agreements. By accepting the license, you state that you understand that the spyware is being loaded along with the useful functions and you agree to allow it to run as a condition of getting the other functions. What the spyware distributors count on--usually correctly--is that people will not read far enough into the license agreement to see those clauses.

Phishing

Phishing involves sending legitimate-looking but bogus emails requesting personal information. A common ploy is to falsely claim that, because of a security breach at the recipient's bank, the recipient must log into his or her account to reconfirm his or her personal data. The email, which typically carries the real logo of the financial institution, includes a link with text that specifies the financial institution's name or URL, but clicking on the link takes you to a fraudulent site that looks exactly like the legitimate financial institution's site. The bogus site may use a URL that appears legitimate unless you look closely. For example, it might be something like www.mybankcom.com or mybank.xxxxx.com, where mybank is the bank's domain.

Phishers rarely if ever have the financial institution's customer list. Instead, they use spam lists containing millions of email addresses, knowing that, just by the law of averages, some recipients will be customers of the target bank. Email and the lists are so inexpensive that this scattershot targeting can still be lucrative.

While most phishing uses only email and a Web site, there are reports of a variety of spyware that has the same effect as phishing. This software monitors Web browsing on a computer. When the user visits a bank's Web site, the spyware captures both keystrokes and a screenshot and sends them back over the Internet to the perpetrator. The screenshot is necessary because the victim's account number may be pre-populated on the screen by a cookie and, therefore, not available through keystroke capture alone.

The Problem's Extent

This is not a small problem. Precise numbers are impossible to come by, but a 2004 Gartner Research report extrapolated from a survey of 5,000 people estimates that phishing cost U.S. banks and credit card issuers $1.2 billion in 2003 alone. Indications are that the problem has increased since then.

The financial impact of spyware is harder to quantify. Much of it is not designed to take money directly out of people's pockets. Instead, it may just capture information that companies use to improve the targeting of their online promotions. In these cases, the cost to the computer user is lost productivity. The spyware, which runs constantly, slows down the victim's computer, thereby making other tasks take longer. The impairment can occasionally be considerable.

Protecting Yourself

The advice for protecting yourself against spyware is similar to what you probably already do to protect against viruses. First, never install software from a source that you don't trust, no matter how useful the software might seem.

In addition, install an anti-spyware tool. Like anti-virus tools, anti-spyware software usually consists of two parts. The first, a batch process that you can initiate manually or schedule to run on a regular basis, scans all of your drives for offending files. The second component is a background process that warns you whenever an attempt is made to install software that looks like spyware. The background process may also watch for spyware-like activity.

Anti-spyware "vendors" (vendors is in quotes because some tools are free) provide frequent updates, allowing the tools to detect new spyware variants.

The best-known of the old-timers in the anti-spyware field are Ad-Adware, from Lavasoft, and Spybot Search & Destroy. Ad-Aware comes in both a free (for non-commercial use) version that provides only a batch scan process and a professional version that also includes background monitoring. Spybot offers only a free batch scan version.

The big players in the anti-virus field now offer anti-spyware software too. McAfee sells a standalone anti-spyware tool that is also bundled in its Internet Security Suite. And Symantec recently made available, in beta form, an Anti-Spyware Edition of its Norton Internet Security Suite. In addition to the traditional anti-virus vendors, Microsoft offers a beta version of an anti-spyware tool that came from its acquisition of Giant Company Software late last year. All three of these products include both drive scanning and background monitoring.

When it comes to phishing, the best advice is to practice safe computing. Don't trust an email purportedly from a financial institution if it asks for personal information. Most reputable financial institutions won't use email for that purpose. If there really is a security breach that requires that you reconfirm your information, they will usually use regular mail to inform you of the problem.

If you receive an email asking for critical information and you aren't sure if it's genuine, check it out by calling the company using the number in the phone book, not one that may be in the email. In addition, never click on the link provided in the email. Always type the address into your Web browser manually, or use your existing bookmarks. And read the URL carefully to ensure that it belongs to your financial institution.

One countermeasure that companies may deploy against phishing in the future, known as two-factor authentication, is already in use at ASB Bank in New Zealand. With ASB's version of two-factor authentication, when customers want to, for example, transfer money, they log into their account with their user name and password as usual. The bank's computer then uses email or text messaging to send the customer's cell phone another password that can be used only during a single Web session. That password becomes invalid if not entered within three minutes. The need for this second password, which can be received only on that particular customer's cell phone as registered in the bank's database, blocks any phishing or other attacks on the customer's account.

The Government to the Rescue?

A few anti-spyware bills are now before the U.S. Congress. One may have cleared the House of Representatives by the time you read this. There are a couple of concerns with these bills. First, unless they are carefully crafted, they could inadvertently block some legitimate Internet activities.

The second concern is with their effectiveness. Much of what the bills propose to legislate against is already illegal. For example, theft and fraud are already against the law, regardless of the medium used to perpetrate it. How effective new wording and stiffer penalties will be is an open question. If the rewards of spyware are high, and they can be, then the answer is probably not very effective.

The global reach of the Internet is another reason that legislation may not be effective. Spyware can be developed by someone in country W, distributed from a server in country X, capture data from a victim in country Y, and transmit it to a server in country Z. Someone in country A may then pick up the data and use it to transfer the victim's money to a bank account in country B. Which country has jurisdiction to prosecute the crime? And what is the likelihood of that country getting the cooperation of all of the other countries should it proceed with prosecution? Probably small.

In short, government regulation is unlikely to provide much help. The best protection is to practice safe computing. Don't hand out personal information unless you are certain that you are giving it to someone you trust. Don't accept software or other files unless you have confidence in the source. And make use of the protective tools available from reputable sources.

Joel Klebanoff is a consultant, a writer, and president of Klebanoff Associates, Inc., a Toronto, Canada-based marketing communications firm. Joel has 25 years experience working in IT, first as a programmer/analyst and then as a marketer. He holds a Bachelor of Science in computer science and an MBA, both from the University of Toronto. Contact Joel at This email address is being protected from spambots. You need JavaScript enabled to view it..